Agenda packet — Lake Forest City Council, June 6, 2023 (part 3 of 4)

The presence of any real degree of control over the manner in which a project is completed makes it a discretionary project.

The term “project” refers to the activity which is being approved and which may be subject to several discretionary approvals by governmental agencies. The term “project” does not mean each separate governmental approval.

11.49 “Project-Specific Effects” means all the direct or indirect environmental effects of a project other than cumulative effects and growth-inducing effects. (Public Resources Code section 21065.3; State CEQA Guidelines section 15191(j).) Item: 10
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Local Guidelines for Implementing the
California Environmental Quality Act (2023) DEFINITIONS 2023 City of Lake Forest Guidelines 11-10 ©Best Best & Krieger LLP

11.50 “Public Water System” means a system for the provision of piped water to the public for human consumption that has 3000 or more service connections. A public water system includes all of the following: (A) Any collection, treatment, storage, and distribution facility under control of the operator of the system which is used primarily in connection with the system; (B) Any collection or pretreatment storage facility not under the control of the operator that is used primarily in connection with the system; (C) Any person who treats water on behalf of one or more public water systems for the purpose of rendering it safe for human consumption. (State CEQA Guideline Section 15155.)

11.51 “Residential” means a use consisting of either of the following: (1) Residential units only. (2) Residential units and primarily neighborhood-serving goods, services, or retail uses that do not exceed 15 percent of the total floor area of the project. Residential, pursuant to State CEQA Guidelines section 21159.24, shall mean a use consisting of either of the following:
(1) Residential units only.
(2) Residential units and primarily neighborhood-serving goods, services, or retail uses that do not exceed 25 percent of the total building square footage of the project.

11.52 “Responsible Agency” means a public agency which proposes to carry out or approve a project for which a Lead Agency has prepared the environmental documents. For the purposes of CEQA, the term “Responsible Agency” includes all federal, state, regional and local public agencies other than the Lead Agency which have discretionary approval power over the project.

11.53 “Riparian Areas” mean those areas transitional between terrestrial and aquatic ecosystems and that are distinguished by gradients in biophysical conditions, ecological processes, and biota. A riparian area is an area through which surface and subsurface hydrology connect waterbodies with their adjacent uplands. A riparian area includes those portions of terrestrial ecosystems that significantly influence exchanges of energy and matter with aquatic ecosystems. A riparian area is adjacent to perennial, intermittent, and ephemeral streams, lakes, and estuarine- marine shorelines.

11.54 “Roadway” means a roadway as defined pursuant to Section 530 of the Vehicle Code and the previously graded and maintained shoulder that is within a roadway right-of-way of no more than five feet from the edge of the roadway.

11.55 “Significant Effect” means a substantial, or potentially substantial, adverse change in any of the physical conditions within the area affected by the activity including land, air, water, minerals, flora, fauna, ambient noise, and objects of historic or aesthetic significance. A social or economic change related to a physical change may be considered in determining whether the physical change is significant.

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Local Guidelines for Implementing the
California Environmental Quality Act (2023) DEFINITIONS 2023 City of Lake Forest Guidelines 11-11 ©Best Best & Krieger LLP

11.56 “Significant Value as Wildlife Habitat” includes wildlife habitat of national, statewide, regional, or local importance; habitat for species protected by the federal Endangered Species Act of 1973 (16 U.S.C. Sec. 1531, et seq.), the California Endangered Species Act (Chapter 1.5 (commencing with Section 2050) of Division 3 of the Fish and Game Code), or the Native Plant Protection Act (Chapter 10 (commencing with Section 1900) of Division 2 of the Fish and Game Code); habitat identified as candidate, fully protected, sensitive, or species of special status by local, state, or federal agencies; or habitat essential to the movement of resident or migratory wildlife.

11.57 “Special Use Airspace” means the land area underlying the airspace that is designated for training, research, development, or evaluation for a military service, as that land area is established by the United States Department of Defense Flight Information Publication, “Area Planning: Special Use Airspace: North and South America (AP/1A)” published by the United States National Imagery and Mapping Agency or its successor.

11.58 “Staff” means the City Manager, the Development Services Director, or his or her designee.

11.59 “Standard” means a standard of general application that is all of the following:
(1) A quantitative, qualitative or performance requirement found in a statute, ordinance, resolution, rule, regulation, order, or other standard of general application;
(2) Adopted for the purpose of environmental protection; (3) Adopted by a public agency through a public review process; (4) Governs the same environmental effect which the change in the environment is impacting; and Governs the jurisdiction where the project is located.

The definition of “standard” includes any thresholds of significance adopted by the City which meet the requirements of this Section.

If there is a conflict between standards, the City shall determine which standard is appropriate based upon substantial evidence in light of the whole record.

11.60 “State CEQA Guidelines” means the Guidelines for Implementation of the California Environmental Quality Act as adopted by the Secretary of the California Resources Agency as they now exist or hereafter may be amended. (California Administrative Code, Title 14, Sections 15000, et seq.)

11.61 “Substantial Evidence” means reliable information on which a fair argument can be based to support an inference or conclusion, even though another conclusion Item: 10
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Local Guidelines for Implementing the
California Environmental Quality Act (2023) DEFINITIONS 2023 City of Lake Forest Guidelines 11-12 ©Best Best & Krieger LLP could be drawn from that information. “Substantial evidence” includes facts, reasonable assumptions predicated upon facts, and expert opinion supported by facts. “Substantial evidence” does not include argument, speculation, unsubstantiated opinion or narrative, evidence which is clearly inaccurate or erroneous, or evidence of social or economic impacts which do not contribute to, or are not caused by, physical impacts on the environment.

11.62 “Sustainable Communities Strategy” is an element of a Regional Transportation Plan, which must be adopted by the metropolitan planning organization for the region. (See Local Guidelines Section 11.35.) The Sustainable Communities Strategy is an integrated land use and transportation plan intended to reduce greenhouse gases. The Sustainable Communities Strategy includes various components such as: consideration of existing densities and uses within the region, identification of areas within the region that can accommodate an eight-year projection of the region’s housing needs, development of projections for growth in the region, identification of existing transportation networks, and preparation of a forecast for development pattern for the region that can be integrated with transportation networks.

11.63 “Tiering” means the coverage of general matters in broader EIRs (such as on general plans or policy statements) with subsequent narrower EIRs or ultimately site-specific EIRs incorporating by reference the general discussions and concentrating solely on the issues specific to the EIR subsequently prepared.

Tiering is appropriate when the sequence of EIRs is:
(1) From a general plan, policy, or program EIR to a program, plan, or policy EIR of lesser scope or to a site-specific EIR;
(2) From an EIR on a specific action at an early stage to a subsequent EIR or a supplement to an EIR at a later stage. Tiering in such cases is appropriate when it helps the Lead Agency to focus on the issues which are ripe for decision and exclude from consideration issues already decided or not yet ripe.
(Public Resources Code §§ 21003, 21061 and 21100.)

11.64 “Transit Priority Area” means an area within one-half mile of a major transit stop that is existing or planned, if the planned stop is schedule to be completed within the planning horizon included in a Transportation Improvement Program adopted pursuant to Section 450.216 or 450.322 of Title 23 of the Code of Federal Regulations.

11.65 “Transit Priority Project” means a mixed use project that is consistent with the general use designation, density, building intensity, and applicable policies specified for the project area in either a sustainable communities strategy or an alternative planning strategy for which for which the California Air Resources Board has accepted a metropolitan planning organization’s determination that the Item: 10
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Local Guidelines for Implementing the
California Environmental Quality Act (2023) DEFINITIONS 2023 City of Lake Forest Guidelines 11-13 ©Best Best & Krieger LLP sustainable communities strategy or the alternative planning strategy would, if implemented, achieve the greenhouse gas emission reduction targets. Such a project may be exempt from CEQA if a detailed laundry list of requirements is met.

To qualify for the exemption, the Transit Priority Project must:
(1) contain at least 50 percent residential use based on total building square footage
(2) if the project contains between 26 percent and 50 percent non-residential uses, the floor-to-area ratio (FAR) must be at least 0.75; (3) have a minimum net density of 20 dwelling units per acre; (4) be located within a half mile of a major transit stop or high-quality transit corridor included in a regional transportation plan; and (5) meet all the requirements of Public Resources Code section 21155.1.

11.66 “Transportation Facilities” includes major local arterials and public transit within five (5) miles of the project site and freeways, highways, overpasses, on-ramps, off- ramps, and rail transit service within ten (10) miles of the project site.

11.67 “Tribal Cultural Resources” are either of the following:
(1) Sites, features, places, cultural landscapes, sacred places, and objects with cultural value to a California Native American tribe that are either of the following:
(a) Included or determined to be eligible for inclusion in the California Register of Historical Resources.
(b) Included in a local register of historic resources as defined in subdivision (k) of Section 5020.1.
(2) A resource determined by the lead agency, in its discretion and supported by substantial evidence, to be significant pursuant to criteria set forth in subdivision (c) of Section 5024.1. In applying the criteria set forth in subdivision (c) of Section 5024.1 for the purposes of this definition, the lead agency shall consider the significance of the resource to a California Native American tribe.

A cultural landscape that meets the criteria set forth above is a tribal cultural resource to the extent that the landscape is geographically defined in terms of the size and scope of the landscape.

A historic resource described in Section 21084.1, a unique archaeological resource as defined in subdivision (g) of Section 21083.2, or a “nonunique archaeological resource” as defined in subdivision (h) of Section 21083.2 Item: 10
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Local Guidelines for Implementing the
California Environmental Quality Act (2023) DEFINITIONS 2023 City of Lake Forest Guidelines 11-14 ©Best Best & Krieger LLP may also be a tribal cultural resource if it conforms with the criteria of Tribal cultural resources.

11.68 “Trustee Agency” means a State agency having jurisdiction by law over natural resources affected by a project which are held in trust for the people of the State of California. Trustee Agencies may include, but are not limited to, the following:
(1) The California Department of Fish and Wildlife (“DFW”) with regard to the fish and wildlife of the state, designated rare or endangered native plants, and game refuges, ecological reserves, and other areas administered by DFW.
(2) The State Lands Commission with regard to state owned “sovereign” lands such as the beds of navigable waters and state school lands. (3) The State Department of Parks and Recreation with regard to units of the State Park System.
(4) The University of California with regard to sites within the Natural Land and Water Reserve System.
(5) The State Water Resources Control Board with respect to surface waters.

11.69 “Urbanized Area” means either of the following: (1) an incorporated city that either by itself or in combination with two contiguous incorporated cities has a population of at least 100,000 persons; or (2) an unincorporated area that meets the requirements set forth in (A) and (B) below.
(A) The unincorporated area must meet one of the following location or density requirements:
(1) the unincorporated area must be:
(i) completely surrounded by one or more incorporated cities, (ii) have a population level of at least 100,000 persons either by itself or in combination with the surrounding incorporated city or cities, and
(iii) have a population density that at least equals the population density of the surrounding city or cities; or
(2) the unincorporated area must be located within an urban growth boundary and have an existing residential population of at least 5,000 persons per square mile. For purposes of this subparagraph, an “urban growth boundary” means a provision of a locally adopted general plan that allows urban uses on one side of the boundary and prohibits urban uses on the other side.

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Local Guidelines for Implementing the
California Environmental Quality Act (2023) DEFINITIONS 2023 City of Lake Forest Guidelines 11-15 ©Best Best & Krieger LLP (B) The board of supervisors with jurisdiction over the unincorporated area must have taken the following steps:
(1) The board has prepared a draft document by which the board would find that the general plan, zoning ordinance, and related policies and programs applicable to the unincorporated area are consistent with principles that:
(i) encourage compact development in a manner that promotes efficient transportation systems, economic growth,
affordable housing, energy efficiency, and an appropriate balance of jobs and housing, and
(ii) protects the environment, open space, and agricultural areas. (2) The board has submitted the draft document to OPR and allowed OPR thirty days to submit comments on the draft findings to the board.
(3) No earlier than thirty days after submitting the draft document to OPR, the board has adopted a final finding in substantial conformity with the draft finding described in the draft document referenced above in (B)(1).

11.70 “Water Acquisition Plans” means any plans for acquiring additional water supplies prepared by the public water system or a city or county lead agency pursuant to subdivision (a) of section 10911 of the Water Code.

11.71 “Water Assessment” or “Water Supply Assessment” means the water supply assessment that must be prepared by the governing body of a public water system, or the City, pursuant to and in compliance with sections 10910 to 10915 of the Water Code, and that includes, without limitation, the elements of the assessment required to comply with subdivisions (d), (e), (f), and (g) of section 10910 of the Water Code.

11.72 “Water Demand Project” means any one of the following:
(1) A residential development of more than 500 dwelling units; (2) A shopping center or business establishment employing more than 1,000 persons or having more than 500,000 square feet of floor space; (3) A commercial office building employing more than 1,000 persons or having more than 250,000 square feet of floor space;
(4) A hotel or motel, or both, having more than 500 rooms; Item: 10
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Local Guidelines for Implementing the
California Environmental Quality Act (2023) DEFINITIONS 2023 City of Lake Forest Guidelines 11-16 ©Best Best & Krieger LLP (5) An industrial, manufacturing, or processing plant, or industrial park planned to house more than 1,000 persons, occupying more than 40 acres of land, or having more than 650,000 square feet of floor area;
(6) Except, a proposed photovoltaic or wind energy generation facility approved on or after October 8, 2011, is not a Water Demand Project if the facility would demand no more than 75 acre-feet of water annually. (7) A mixed-use project that includes one or more of the projects specified in subdivisions (1); (2), (3), (4), (5), (6) and (8);
(8) A project that would demand an amount of water equivalent to, or greater than, the amount of water; required by a 500 dwelling unit project; (9) For public water systems with fewer than 5,000 service connections, a project that meets the following criteria:
(a) A proposed residential, business, commercial, hotel or motel, or industrial development that would account for an increase of 10 percent or more in the number of a public water system’s existing service connections; or
(b) A mixed-use project that would demand an amount of water equivalent to, or greater than, the amount of water required by residential development that would represent an increase of 10 percent or more in the number of the public water system’s existing service connections. (State Guideline Section 15155.)

11.73 “Waterway” means a bay, estuary, lake, pond, river, slough, or a perennial, intermittent, or ephemeral stream, lake, or estuarine-marine shoreline.

11.74 “Wetlands” has the same meaning as that term is construed in the regulations issued by the United States Army Corps of Engineers pursuant to the Clean Water Act. Thus, “wetlands” means areas that are inundated or saturated by surface or ground water at a frequency and duration sufficient to support, and that under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions. Wetlands generally include swamps, marshes, bogs, and similar areas. (Public Resources Code section 21159.21(d), incorporating Title 33, Code of Federal Regulations, Section 328.3.)

11.75 “Wildlife Habitat” means the ecological communities upon which wild animals, birds, plants, fish, amphibians, and invertebrates depend for their conservation and protection. (Public Resources Code section 21159.21.)

11.76 “Zoning Approval” means any enactment, amendment, or appeal of a zoning ordinance; granting of a conditional use permit or variance; or any other form of land use, subdivision, tract, or development approval required from the city or county having jurisdiction to permit the particular use of the property.

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Local Guidelines for Implementing the
California Environmental Quality Act (2023) FORMS
2023 City of Lake Forest Guidelines 12-1 ©Best Best & Krieger LLP 12) FORMS
See Forms A-S which accompany these Guidelines.

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Local Guidelines for Implementing the
California Environmental Quality Act (2023) COMMON ACRONYMS 2023 City of Lake Forest Guidelines 13-1 ©Best Best & Krieger LLP 13) COMMON ACRONYMS
ADEIR – Administrative Draft Environmental Impact Report AQMD – Air Quality Management District
AQMP – Air Quality Management Plan
AR – Administrative Record
ARB – Air Resources Board
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BMP – Best Management Practices
BO – Biological Opinion
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Cal EPA – California Environmental Protection Agency
CAP – Climate Action Plan
CCAA – California Clean Air Act
CCR – California Code of Regulations (Title 14 Sections 15000 et seq CE – Categorical Exclusion (NEPA)
CESA – California Endangered Species Act
CEQA – California Environmental Quality Act
CFR – Code of Federal Regulations
CMP – Congestion Management Plan
CRWQCB – California Regional Water Quality Control Board **************************************************
DEIR – Draft Environmental Impact Report
DFW – Department of Fish and Wildlife
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EA – Environmental Assessment (NEPA term)
EIR – Environmental Impact Report
EIS – Environmental Impact Statement (NEPA term)
EPA – Environmental Protection Agency
ESA – Endangered Species Act; Environmental Site Assessment **************************************************
FCAA – Federal Clean Air Act
FEIR – Final Environmental Impact Report
FOIA – Freedom of Information Act (Federal)
FONSI – Finding of No Significant Impact (NEPA term)
FWS – Fish and Wildlife Service
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GHG – Greenhouse Gas
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Local Guidelines for Implementing the
California Environmental Quality Act (2023) COMMON ACRONYMS 2023 City of Lake Forest Guidelines 2 ©Best Best & Krieger LLP GW – Ground Water
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HH&E – Human Health and Environment
HRA – Health Risk Assessment
HS – Hazardous Substance
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IS – Initial Study
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LADD – Lifetime Average Daily Dose; Lowest Acceptable Daily Dose LEA – Local Enforcement Agency
LESA – Land Evaluation and Site Assessment
LUFT – Leaking Underground Fuel Tank
LUST – Leaking Underground Storage Tanks
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MEIR – Master Environmental Impact Report
MMRP – Mitigation Monitoring and Reporting Plan
MPO – Metropolitan Planning Organization
MND – Mitigated Negative Declaration
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ND – Negative Declaration
NEPA – National Environmental Policy Act
NOA – Notice of Availability
NOC – Notice of Completion
NOD – Notice of Determination
NOE – Notice of Exemption
NOI – Notice of Intent
NOP – Notice of Preparation
NOV – Notice of Violation
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OPR – Office of Planning and Research
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PEIR – Program Environmental Impact Report
PM – Particulate Matter
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Local Guidelines for Implementing the
California Environmental Quality Act (2023) COMMON ACRONYMS 2023 City of Lake Forest Guidelines 3 ©Best Best & Krieger LLP PRA – Public Records Act
PSA – Permit Streamlining Act
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RCRA – Resource Conservation and Recovery Act (1976) Governs definition, handling, and disposal of hazardous waste
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SCH – State Clearinghouse
SEIR – Supplemental or Subsequent Environmental Impact Report SMARA – Surface Mining and Reclamation Act
SWMP – Stormwater Monitoring Program
SWPPP – Stormwater Pollution Prevention Program
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TCM – Transportation Control Measure
TCP – Transportation Control Plan
TDS – Total Dissolved Solids
TMP – Transportation Management Plan
Title V – refers to Title V of the Clean Air Act related to ambient air quality provisions TLV – Threshold Limit Value
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UBC – Uniform Building Code
UFC – Uniform Fire Code
UGST – Underground Storage Tank
USDW – Underground Source of Drinking Water
UWMP – Urban Water Management Plan
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VOC – Volatile Organic Compounds (Health & Safety Code, Section 25123.6.) VOS – Vehicle Operating Survey
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WQS – Water Quality Standard
WSA – Water Supply Assessment
WTP – Water Treatment Plant
WWTP – Wastewater Treatment Plan
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CITY COUNCIL AGENDA REPORT
MEETING DATE: 6/6/2023
DEPARTMENT: Public Works
SUBJECT:

THIRD AMENDMENT TO THE AGREEMENT WITH THOMAS J. O’CONNELL

DBA LAKE FOREST ELECTRIC FOR ELECTRICAL MAINTENANCE

SERVICES
RECOMMENDED ACTION(S):

1. Approve the Third Amendment to the Agreement with Thomas J.

O'Connell DBA Lake Forest Electric for Electrical Maintenance Services

2. Authorize the Mayor to sign, and the City Clerk to attest, the Third Amendment substantially in the form attached
EXECUTIVE SUMMARY:

On June 18, 2019, the City Council approved a three-year Professional Consultant Services Agreement with Thomas J. O'Connell DBA Lake Forest Electric (“LFE”) to perform electrical maintenance services at all City facilities on a time and materials basis (“Agreement”) (Attachment 1). The Agreement includes a three-year term with two one-year extensions and a $330,267.75 compensation amount. The City Manager amended the Agreement in March 2022 to extend the term by one year with no compensation increase to June 30, 2023 (Attachment 2). The City Manager approved a 10% increase to the compensation amount in October 2022, thereby increasing the compensation amount to $363,294.52 (Attachment 3). The proposed Third Amendment would extend the term of the Agreement by an additional year, increase the compensation amount by $120,756.70 for the additional year’s work, and update the labor rates to reflect the State Department of Industrial Relations’ new prevailing wage rates (Attachment 4). If the proposed Third Amendment is approved, the term of the Agreement would expire on June 30, 2024 and the total compensation amount would be $484,051.22.

BACKGROUND:

On June 18, 2019, the City Council approved the Agreement with LFE for Electrical Maintenance Services (Attachment 1) with a $330,267.75 compensation amount after the completion of a competitive Request for Bids Item: 11
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(“RFB”) process. The Agreement includes two optional one-year extensions. On March 8, 2022, the City Manager approved the First Amendment to the Agreement (Attachment 2), utilizing one of the two one-year extensions and extending the term of the Agreement with no additional costs to June 30, 2023.

On October 11, 2022, the City Manager approved the Second Amendment to the Agreement (Attachment 3) to add an additional 10% to the compensation amount, which resulted in a $363,294.52 compensation amount.

DISCUSSION:

The scope of work performed under the current Agreement consists of on-call electrical maintenance services for all parks, landscaped areas, and the Civic Center. The Agreement includes all labor, materials, equipment, tools, and incidentals to repair electrical facilities and equipment at these locations as required. Typical work includes lighting repairs and maintenance, park restroom repairs, and upgrades of electrical equipment. LFE responds to both planned and emergency electrical maintenance issues.

The proposed Third Amendment with LFE (Attachment 4) would extend the term for an additional year and add $120,756.70 in compensation to cover the costs of an additional year of work. If approved, the Third Amendment would bring the total compensation amount in the Agreement to $484,051.22. Additional compensation is needed to allow the City to respond to electrical maintenance issues for the next fiscal year.

The work items performed by LFE qualify as public works projects and the Third Amendment would increase the hourly labor rates for straight time, regular overtime, and Sunday and holiday overtime work to comply with the required State Department of Industrial Relations (“DIR”) prevailing wage rates for the electrician “inside wireman” trade classification. All other unit prices remain the same as the original 2019 Agreement. Although the Agreement includes a clause to allow for increased rates in accordance with changes in the Consumer Price Index (“CPI”), a CPI increase would not be sufficient to accommodate the necessary DIR wage rate increase. Staff negotiated with the contractor to adjust only the hourly labor rates portion of the compensation section and to not apply a CPI increase to the other contract rates. It is within the City Council’s authority to approve the recommended Third Amendment.

If the proposed Third Amendment to the Agreement is approved, the term of the Agreement would be extended to June 30, 2024. Staff believes that LFE’s performance has met or exceeded the scope of work in the Agreement relative to the responsibilities associated with electrical maintenance services. Throughout the term of the Agreement, LFE demonstrated its willingness to respond quickly to requests for service and consistently completed all requested work in a Item: 11
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professional manner. LFE provides excellent customer service and has demonstrated a readiness to assist with emergency and urgent repairs.

The chart below provides an overall summary of LFE’s performance since the most recent amendment. Consistent with the City’s Purchasing and Contracting Guidelines, including vendor assessment, staff recommends approval of the Third Amendment to the Agreement to ensure that the City retains the ability to continue performing electrical maintenance and repair services.

Lake Forest Electric Performance Assessment
October 11, 2022, through March 21, 2023
Category Rating
Performance of Scope of Services ☐ Unsatisfied ☐ Satisfied ☒ Very Satisfied ☐ N/A
Timeliness ☐ Unsatisfied ☐ Satisfied ☒ Very
Satisfied ☐ N/A
Budget Performance ☐ Unsatisfied ☐ Satisfied ☒ Very
Satisfied ☐ N/A
Customer Service ☐ Unsatisfied ☐ Satisfied ☒ Very
Satisfied ☐ N/A
The proposed Third Amendment was approved as to form by the City Attorney’s Office. If approved, sufficient funding to cover the costs of the Third Amendment will be requested in the future 2023-2025 Operating Budget for the cost of Electrical Maintenance Services.

FISCAL IMPACT:

Approval of the Third Amendment to the Agreement with LFE would increase the compensation amount by $120,756.70 for a new not-to-exceed amount of $484,051.22. The proposed Third Amendment would increase contract labor rates to account for increases in the State-mandated prevailing wage rates. If approved, sufficient funding to cover the costs of the Third Amendment will be requested in the future 2023-2025 Operating Budget to cover the costs of the recommended action.

ATTACHMENTS:

1. Agreement with Lake Forest Electric for Electrical Maintenance Services

2. First Amendment to the Agreement with Lake Forest Electric for Electrical Maintenance Services
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3. Second Amendment to the Agreement with Lake Forest Electric for Electrical Maintenance Services

4. Third Amendment to the Agreement with Lake Forest Electric for Electrical Maintenance Services
Initiated By: Jonathan Poole, Senior Management Analyst Submitted By: Thomas E. Wheeler, P.E., Director of Public Works/City Engineer Approved By: Debra Rose, City Manager
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Attachment 1
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Attachment 2
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Attachment 3
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55136.00200\31919338.1 - 1 -

CITY OF LAKE FOREST

SECOND AMENDMENT TO

AGREEMENT FOR MAINTENANCE SERVICES
PARTIES AND DATE.

This Second Amendment to the Agreement for Maintenance Services (“Second Amendment”) is entered into on the [***INSERT DAY***] day of [***INSERT MONTH***] , [***INSERT YEAR***], by and between the City of Lake Forest, a municipal corporation, organized under the laws of the State of California, with its principal place of busine ss at 100 Civic Center Drive, Lake Forest, CA 92630 (“City”) and Thomas J. O’Connell dba Lake Forest Electric, a sole proprietorship, with its principal place of business at 19312 Sleeping Oak, Trabuco Canyon, California 92679 (“Contractor”). City and Consultant are sometimes individually referred to herein as "Party" and collectively as "Parties."
RECITALS.

2.1 Agreement. The Parties entered into that certain Agreement for On-Call Electrical and Maintenance Services dated June 18, 2019 (“Agreement”).

2.2 First Amendment. The Parties entered into that certain First Amendment to the Agreement to extend the term of the Agreement and update the Delivery of Notices dated March 8, 2022.

2.3 Second Amendment. The Parties now desire to amend the Agreement in order to increase the total amount of compensation under the Agreement.

TERMS.

3.1 Compensation. Section 3.3.1 of the Agreement is hereby amended in its entirety to read as follows:

Contractor shall receive compensation, including authorized reimbursements, for all Services rendered under this Agreement at the rates set forth in Exhibit “C” attached hereto and incorporated herein by reference. The total compensation shall not exceed

THREE HUNDRED SIXTY-THREE THOUSAND TWO HUNDRED

NINETY-FOUR DOLLARS AND FIFTY -TWO CENTS
($363,294.52) without written approval of the City Council or City Manager as applicable. Extra Work may be authorized, as described below, and if authorized, will be compensated at the rates and manner set forth in this Agreement.

3.2 Remaining Provisions of Agreement. Except as otherwise specifically set forth in this Second Amendment, the remaining provisions of the Agreement shall remain in full force and effect.

DocuSign Envelope ID: EB41A448-348D-4B7D-93D4-83520A749935 [***INSERT MONTH***]
[***INSERT YEAR***]
[***INSERT DAY***]
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55136.00200\31919338.1 - 2 -

CITY OF LAKE FOREST THOMAS J. O’CONNELL DBA LAKE

FOREST ELECTRIC
By: [AUTHORIZED CITY SIGNATURE]
Debra Rose
City Manager

By: [VENDOR SIGNATURE 1]
Thomas J. O'Connell
Owner

ATTEST:

By: [CITY CLERK SIGNATURE]
Lisa Berglund
City Clerk

APPROVED AS TO FORM:

By: [CITY ATTORNEY SIGNATURE]
Best Best & Krieger LLP
City Attorney

DocuSign Envelope ID: EB41A448-348D-4B7D-93D4-83520A749935 Item: 11
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Attachment 4
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55136.00200\31919338.1 - 1 -

CITY OF LAKE FOREST

THIRD AMENDMENT TO

AGREEMENT FOR MAINTENANCE SERVICES
PARTIES AND DATE.

This Third Amendment to the Agreement for Maintenance Services (“Second Amendment”) is entered into on the [***INSERT DAY***] day of [***INSERT MONTH***] , [***INSERT YEAR***], by and between the City of Lake Forest, a municipal corporation, organized under the laws of the State of California, with its principal place of busine ss at 100 Civic Center Drive, Lake Forest, CA 92630 (“City”) and Thomas J. O’Connell dba Lake Forest Electric, a sole proprietorship, with its principal place of business at 19312 Sleeping Oak, Trabuco Canyon, California 92679 (“Contractor”). City and Consultant are sometimes individually referred to herein as "Party" and collectively as "Parties."
RECITALS.

2.1 Agreement. The Parties entered into that certain Agreement for On-Call Electrical and Maintenance Services dated June 18, 2019 (“Agreement”).

2.2 First Amendment. The Parties entered into that certain First Amendment to the Agreement to extend the term of the Agreement and update the Delivery of Notices dated March 8, 2022.

2.3 Second Amendment. The Parties entered into that certain Second Amendment to the Agreement to increase the total amount of compensation under the Agreement , dated November 2, 2022.

2.4 Third Amendment. The Parties now desire to amend the Agreement in order to extend the term of the Agreement and increase the total compensation under the Agreement.

TERMS.

3.1 Term. Section 3.1.2 of the Agreement is hereby amended in its entirety to read as follows:

The term of this Agreement shall be from July 1, 2019 to June 30, 2024 unless earlier terminated as provided herein . Contractor shall complete the Services within the term of this Agreement, and shall meet any other established schedules and deadlines.

3.2 Compensation. Section 3.3.1 of the Agreement is hereby amended in its entirety to read as follows:

FOUR HUNDRED EI GHTY-FOUR THOUSAND FIFTY -ONE
DocuSign Envelope ID: F86794D2-CAF3-4AC0-8E31-2C8E55B9A86B Item: 11
526

55136.00200\31919338.1 - 2 -

DOLLARS AND TWENTY -TWO CENTS ($484,051.22) without
written approval of the City Council or City Manager as applicable.

Extra Work may be authorized, as described below, and if authorized, will be compensated at the rates and m anner set forth in this Agreement.

3.3 Remaining Provisions of Agreement. Except as otherwise specifically set forth in this Third Amendment, the remaining provisions of the Agreement shall remain in full force and effect.

CITY OF LAKE FOREST THOMAS J. O’CONNELL DBA LAKE

FOREST ELECTRIC
By: [AUTHORIZED CITY SIGNATURE]
Doug Cirbo
Mayor

By: [VENDOR SIGNATURE 1]
Thomas J. O'Connell
Owner

ATTEST:

By: [CITY CLERK SIGNATURE]
Lisa Berglund
City Clerk

APPROVED AS TO FORM:

By: [CITY ATTORNEY SIGNATURE]
Best Best & Krieger LLP
City Attorney

DocuSign Envelope ID: F86794D2-CAF3-4AC0-8E31-2C8E55B9A86B Item: 11
527

55136.00200\31919338.1 Attachment “1”-1

ATTACHMENT “1” TO THIRD AMENDMENT TO

AGREEMENT FOR MAINTENANCE SERVICES
Contractor shall be paid for services rendered in accordance with Section 3.3 of the Agreement and as described above under Exhibit “A” Scope of Services the not to exceed fee of four hundred eighty-four thousand fifty -one dollars and twenty -two cents ($48 4,051.22) billed on a time and materials basis. Hourly labor rates are subject to changes in prevailing wages.

In the event that this Agreement is renewed pursuant to Section 3.1.2, the rates set forth above may be increased or reduced each year at the time of renewal, but any increase shall not exceed the Consumer Price Index, All Urban Consumers, Los Angeles-Long Beach-Anaheim.

Description Estimated
Quantity
Unit of
Measure Unit Price Total Price
Parts and Materials
including markup (9%) 90,000 Percent 1.09% $98,100.00 Hydraulic Man Lifting
Truck capable of
reaching a 20-foot
height
300 Hours $25.00 $7,500.00
Hydraulic Man Lifting
Truck capable of
reaching an 80-foot
height
150 Hours $120.00 $18,000.00
Labor straight time 3,000 Hours $64.96 $194,880.00
Labor overtime, Daily
and Saturday 30 Hours $87.70 $2,631.00
Labor overtime,
Sunday and Holiday 15 Hours $110.45 $1,656.75
Equipment Rental
Allowance at the
current CalTrans rental
rate
1 Lot $7,500.00 $7,500.00
Original Agreement
Total
$330,237.75

Second Amendment (10% Increase) $33,056.77

Third Amendment
Description Estimated
Quantity
Unit of
Measure Unit Price Total
Parts and Materials
including markup (9%) 30,000 Percent 1.09% $32,700.00 DocuSign Envelope ID: F86794D2-CAF3-4AC0-8E31-2C8E55B9A86B Item: 11
528

55136.00200\31919338.1 Attachment “1”-2

Description Estimated
Quantity
Unit of
Measure Unit Price Total
Hydraulic Man Lifting
Truck capable of
reaching a 20-foot
height
100 Hours $25.00 $2,500.00
Hydraulic Man Lifting
Truck capable of
reaching an 80-foot
height
50 Hours $120.00 $6,000.00
Labor straight time 1,000 Hours $75.40 $75,400.00
Labor overtime, Daily
and Saturday 10 Hours $101.76 $1,017.60
Labor overtime, Sunday
and Holiday 5 Hours $127.82 $639.10
Equipment Rental
Allowance at the current
CalTrans rental rate
1 Lot $7,500.00 $2,500.00
Third Amendment $120,756.70

Total Contract $484,051.22

Markup not to exceed 9% on parts and materials.

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529

CITY COUNCIL AGENDA REPORT
MEETING DATE: 6/6/2023
DEPARTMENT: Management Services
SUBJECT:

Interim Appointment for the Position of Deputy City Manager and Adopting a Resolution Authorizing the Hiring a Retired Annuitant.

RECOMMENDED ACTION(S):

1. Adopt a Resolution entitled: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE FOREST, CALIFORNIA, APPOINTING DONALD J.

WHITE AS DEPUTY CITY MANAGER ON AN INTERIM BASIS AND

APPROVING EMPLOYMENT AGREEMENT

2. Authorize the Mayor to sign, and the City Clerk attest to, the employment agreement with Donald White, in the form attached.

EXECUTIVE SUMMARY:

On May 12, 2023, the position of Deputy City Manager became vacant. To ensure continuity of operations and provide the necessary leadership to the City during the recruitment for a permanent replacement, staff recommends the City Council consider appointing Donald J. White to serve as the Interim Deputy City Manager until a permanent Deputy City Manager is selected. In accordance with the Public Employees’ Retirement Law, to effectuate the hiring of Mr. White on a temporary basis, the City Council must authorize via resolution his hiring because he is a California Public Employees’ Retirement System (“CalPERS”) retired annuitant. Staff recommends the City Council adopt the attached resolution, which would effectuate the hiring of Mr. White at an hourly rate of $99.1501 per hour (Attachment 1). Staff also recommends the City Council authorize the Mayor to sign and the City Clerk to attest the attached Employment Agreement with Mr. White (Attachment 2). Sufficient funding is available to cover the costs of the recommended actions.

DISCUSSION:

CalPERS recognizes that retirees can play an important role in maintaining city operations, particularly in short-term or emergency situations; however, State law specifies limitations on a retiree’s service when returning to work for a CalPERS agency. Government Code section 21221(h) of the Public Employees’ Item: 12
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2 6
5 6
Retirement Law allows the City to hire a retiree to fill a vacant position on an interim basis during the active recruitment for a permanent appointment. This Section requires that the appointment be made by the City Council to a position requiring specialized skills, be a one-time appointment, that pay be an hourly rate within the range for the position as set forth on a publicly approved salary schedule, that no benefits or other compensation be provided, and that the employee does not exceed 960 hours worked in a fiscal year for all CalPERS employers. Additionally, the retiree must have been retired for at least 180 days (unless an exception exists). Section 7522.56 imposes similar restrictions, consistent with Section 21221(h).

Mr. White has over 40 years of local government experience, including service as a city manager, assistant city manager, chief financial officer, director of administrative services, economic development director, and interim recreation director. Mr. White possesses the experience and skills needed to serve as Interim Deputy City Manager. Mr. White’s appointment also meets all of the additional legal requirements.

In accordance with applicable law, and subject to City Council approval, the terms of Mr. White’s appointment are as follows:
•The Interim appointment will begin on June 7, 2023, and will end when a permanent Deputy City Manager is selected and begins employment; •The hourly rate of pay will be $99.1501 based on the monthly top step salary for the Deputy City Manager position of $17,186 divided by 173.333; Staff is recommending the City Council adopt the Resolution authorizing the temporary appointment of retired annuitant, Mr. White (Attachment 1). Staff also recommends the City Council authorize the Mayor to sign and the City Clerk to attest to the attached Employment Agreement with Mr. White (Attachment 2).

Both the attached resolution and the proposed Employment Agreement have been reviewed and approved as to form by the City Attorney.

FISCAL IMPACT:

Sufficient funding is available to cover the costs of the recommended action, and the proposed 2023-2025 Operating Budget includes funding for the Deputy City Manager position. There is no additional ongoing fiscal impact associated with the temporary appointment of a retired annuitant to the Interim Deputy City Manager position. In accordance with the CalPERS requirements, Mr. White will not be eligible for any compensation or benefits in addition to the hourly pay rate while working for the City of Lake Forest as a retired annuitant.

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ATTACHMENTS:

1. Resolution Authorizing the Hiring of Retired Annuitant, Donald White

2. Agreement for Temporary Employment, Donald White
Initiated By: Shelly Cisneros, Human Resources Manager
Submitted By: Keith Neves, Assistant City Manager
Approved By: Debra Rose, City Manager
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5 2
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7 ATTACHMENT 1
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7 RESOLUTION NO. _____

A RESOLUTION OF THE CITY COUNCIL OF THE

CITY OF LAKE FOREST, CALIFORNIA,
APPOINTING DONALD J. WHITE AS DEPUTY CITY MANAGER ON AN

INTERIM BASIS AND APPROVING EMPLOYMENT AGREEMENT

THE CITY COUNCIL OF THE CITY OF LAKE FOREST DOES
HEREBY RESOLVE AS FOLLOWS:

WHEREAS, Government Code sections 7522.56 and 21221(h) permit the City Council to appoint a California Public Employees’ Retirement System (“CalPERS”) retiree to a vacant position requiring specialized skills during recruitment for a permanent appointment, and provides that such appointment will not subject the retired person to reinstatement from retirement or loss of benefits so long as it is a single appointment that does not exceed 960 hours in a fiscal year; and
WHEREAS, the position of Deputy City Manager became vacant on May 12, 2023; and
WHEREAS, to ensure the efficient and uninterrupted continued operation of the City, the City Council desires to appoint Donald White to the vacant position of Deputy City Manager on an interim basis, effective June 7, 2023; and WHEREAS, Donald White has over 40 years of local government experience including service as a city manager, assistant city manager, chief financial officer, director of administrative services, economic development director, and interim recreation director; and
WHEREAS, an appointment under Government Code Section 21221(h) requires an active, publicly posted recruitment for a permanent replacement; and WHEREAS, the current status of this recruitment is open, and the vacancy has been publicly posted and applications are being accepted; and WHEREAS, this Section 21221(h) appointment shall only be made once and therefore will end on the date immediately preceding the date on which the permanent replacement for the vacant position of Deputy City Manager for the City of Lake Forest commences his or her employment or, if earlier, the date that this appointment is terminated by the City of Lake Forest or Donald White; and WHEREAS, it is understood by Donald White and the City that the combined total hours to be served by Donald White in any fiscal year for all CalPERS employers combined shall not exceed the 960-hour limitation set forth in California Government Code section 21221(h) and section 7522.56(d); and
Item: 12
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5 2
1 8
7 WHEREAS, the City Council has reviewed a proposed employment agreement by and between Donald White and the City of Lake Forest and it is attached hereto; and WHEREAS, the compensation paid to retirees cannot be less than the minimum nor exceed the maximum monthly base salary paid to other employees performing comparable duties, divided by 173.333 to equal the hourly rate; and WHEREAS, the maximum base salary for this position is $17,186 and the hourly equivalent is $99.1501; and
WHEREAS, the hourly rate paid to Donald White will be $99.1501; and

WHEREAS, Donald White has not and will not receive any other benefit, incentive, compensation in lieu of benefit or other form of compensation in addition to this hourly pay rate.
.

NOW THEREFORE, BE IT RESOLVED, by the City Council of the City of Lake Forest, California, as follows:

SECTION 1. That the foregoing recitals are true and correct.

SECTION 2. As required by Government Code sections 7522.56 and 21221(h), the City Council makes the following findings:
(A) All facts set forth in the Recitals to this Resolution are true and correct and incorporated herein by reference.
(B) Donald White has the specialized skills needed to perform the work required of the Interim Deputy City Manager until a permanent Deputy City Manager is appointed and thereafter begins his or her service.
(C) It is in the best interests of the City of Lake Forest to enter into an employment agreement with and to appoint Donald White as Deputy City Manager for the City of Lake Forest on an interim basis, effective June 7, 2023, pursuant to the authority provided under Government Code sections 21221(h) and 7522.56.

SECTION 3. Donald White is hereby appointed as Deputy City Manager for the City of Lake Forest on an interim basis, effective June 7, 2023, until the date immediately preceding the date on which the permanent replacement for the vacant position of Deputy City Manager commences his or her employment, unless earlier terminated, in accordance with Government Code sections 21221(h) and 7522.56 and with the provisions of the employment agreement, attached hereto as Exhibit A.

SECTION 4. The employment agreement with Donald White, is hereby approved by the City Council of the City of Lake Forest, effective June 7, 2023, and the Mayor is authorized to execute the agreement.

Item: 12
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7 PASSED, APPROVED AND ADOPTED this ___ day of _____, 2023 by the following vote, to wit:
_____________________

DOUG CIRBO
MAYOR
ATTEST:
______________________________

LISA BERGLUND

CITY CLERK
APPROVED AS TO FORM:
______________________

MATTHEW RICHARDSON

CITY ATTORNEY

STATE OF CALIFORNIA)

COUNTY OF ORANGE ) SS

CITY OF LAKE FOREST )
I, Lisa Berglund, City Clerk of the City of Lake Forest, California, do hereby certify that the foregoing Resolution No.__ was duly passed and adopted at a regular meeting of the Lake Forest City Council on the ___ day of _____, 2023 by the following vote, to wit:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:
_______________________

LISA BERGLUND

CITY CLERK
Item: 12
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7 Exhibit A
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5 2
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7 INTERIM DEPUTY CITY MANAGER

EMPLOYMENT AGREEMENT-LIMITED TERM RETIRED ANNUITANT
This INTERIM DEPUTY CITY MANAGER EMPLOYMENT AGREEMENT-
LIMITED TERM RETIRED ANNUITANT (“Agreement”) is made by and between the CITY OF LAKE FOREST (“City”), a municipal corporation in the State of California and DONALD J.

WHITE (“Employee”), an individual. The City and Employee may be referred to individually as a “Party” or collectively as the “Parties.”

R E C I T A L S
WHEREAS, City of Lake Forest (“City”) desires to hire Employee as a temporary, at- will employee for a definite period of time to serve in the position of Interim Deputy City Manager for the City of Lake Forest, California, which is a position that requires specialized skills, and Employee desires to perform and assume responsibility as the Interim Deputy City Manager on a temporary basis subject to the terms and conditions set forth in this Agreement; and
WHEREAS, the parties wish to have Employee perform the services of Interim Deputy City Manager, while the City conducts its recruitment for a permanent Deputy City Manager, and will terminate such services upon the City’s selection and hiring of a permanent Deputy City Manager; and
WHEREAS, the City is actively conducting a recruitment for a permanent Deputy City Manager;
and
WHEREAS, Government Code Sections 7522.56 and 21221(h) permit retired annuitants under the California Public Employees’ Retirement System (“CalPERS”) to be employed without reinstatement from retirement upon appointment by a public agency to fill a vacant position on an interim basis during the recruitment to permanently fill the vacant position, if approved by the City Council; and
WHEREAS, Employee has served as a City Manager and in various other management positions with over forty years of Municipal experience, and those specialized skills are necessary to support the continuing operations of the City during the recruitment; and WHEREAS, the City wishes to establish the terms and conditions of Employee’s services to the City through this Agreement, in compliance with Government Code section 7522.56 and 21221(h).

NOW, THEREFORE, in consideration of the mutual covenants contained herein, City and Employee hereby agree as follows:

Item: 12
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A G R E E M E N T

1.0 EMPLOYMENT & DUTIES

1.1 Duties. City hereby employs Employee as Interim Deputy City Manager for the City to perform the functions and duties of the Deputy City Manager and shall temporarily perform the functions of this position, which is a position involving highly specialized and critically needed skills as set forth in state law. Such employment is “at-will,” subject to the terms of this Agreement, and Employee shall perform said duties at the pleasure of the City Manager.

1.2 Work Schedule. Employee’s work hours under this Agreement generally will be limited to normal business hours of the City (Monday through Thursday, from 8:00 a.m. to 6:00 p.m., and Fridays from 8:00 a.m. to 5:00 p.m.). Employee will be required to keep accurate time records of his hours worked and be enrolled in the myCalPERS system as a retired annuitant to ensure that he does not exceed 960 hours worked within the fiscal years that occur during the term of this Agreement. In the position of Interim Deputy City Manager, work before or after normal business hours may be required. Employee shall attempt to flex his hours (starting late or ending early or scheduling time off during the week), so that he does not work over 40 hours in a workweek. If Employee determines that work over 40 hours per work week is required, Employee is required to notify the City Manager in advance, so that the matter may be reviewed as deemed necessary. Employee’s workweek begins/ends halfway through the workday on Fridays.

1.3 Employment Status. Employee shall serve at the will and pleasure of the City Manager and understands he is an "at-will" employee subject to summary dismissal without any right of notice or hearing, including any “Skelly” hearing. City may terminate the employment of Employee at any time, as set forth in Section 2.2 below. Employee will not acquire a property interest in the position of Interim Deputy City Manager. Employee is a temporary employee employed to perform specialized services in accordance with Government Code sections 7522.56 and 21221(h).

2.0 TERM

2.1 Term. This Agreement shall become effective upon the date executed both by Employee and the Mayor, following approval by the City Council. Employee shall commence the performance of his duties under this Agreement on June 7, 2023 (“Commencement Date”). This Agreement shall expire as of the first of the following to occur:
(i) upon the employment commencement date of a permanent Deputy City Manager; (ii) upon Employee working 960 hours combined for any CalPERS Agencies during fiscal year 2023-2024 or 960 hours in any subsequent fiscal year; or (iii) upon termination of the Agreement by either Employee or the City as provided below.

2.2 Termination by City or Employee. The City may terminate this Agreement at any time with or without cause and with or without notice. At the time of termination, Employee shall not be entitled to any pay or benefits, except that which is owed for those hours already worked. Additionally, Employee may terminate this Agreement at any time Item: 12
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with or without cause, provided, however he shall reasonably provide the City with at least two (2) weeks’ advance written notice prior to the effective date of termination, if practicable, unless a shorter period is acceptable to the City.

2.3 Transfer of Responsibilities. After Notice of Resignation or Termination, Employee shall cooperate with the City, as requested by the City, to affect a transition of Employee’s responsibilities and duties and to ensure that the City is aware of all matters being handled by Employee.

2.4 No Reappointment or Extension of Term. In accordance with state law and the requirements of the PERL, Employee may only be appointed to this position one time (single appointment).

3.0 COMPENSATION AND REIMBURSEMENT

3.1 Compensation and Compensation Cap. For the services rendered pursuant to this Agreement, City agrees to pay Employee as employee’s sole compensation, the amount of $99.1501 per hour, which amount is in conformance with the requirements of Government Code Section 7522.56(d). The hourly rate is not more than the maximum nor less than the minimum monthly base salary paid to other employees performing comparable duties as listed on the City’s publicly approved pay schedule, reflected as an hourly rate by dividing the monthly base pay of $17,186 by 173.333. Because Employee is paid on an hourly basis, and in accordance with the FLSA, if Employee works over 40 hours per workweek, Employee will be paid for additional hours at the legally required overtime rate.

3.2 No Other Benefits. Employee shall not receive any benefits, incentives, compensation in lieu of benefits, or any other forms of compensation.

3.3 Reimbursable Expenses. Employee shall be entitled to reimbursement of mileage for driving required in the course of his work (not commuting), in accordance with City policies for all employees. Employee shall not be entitled to reimbursement for any other costs or expenses incurred in the performance of Employee’s duties under this Agreement, unless said costs and expenses have received prior approval by the City Council and are supported by written documentation in accordance with the established polices and customary practices of the City.

Item: 12
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4.0 CONDITIONS OF EMPLOYEE’S SERVICES AND ACKNOWLEDGMENT

OF NO BENEFITS

4.1 Conflicts Prohibited. During the term of this Agreement, Employee shall not engage in any business or transaction or maintain a financial interest which conflicts, or reasonably might be expected to conflict, with the proper discharge of Employee’s duties under this Agreement. Employee shall comply with all requirements of the law, including but not limited to, Sections 87100 et seq., Section 1090 and Section 1125 of the Government Code, and all other similar statutory and administrative rules.

4.2 Provision of Benefits Prohibited. Employee is a CalPERS retiree and will thus not be enrolled in CalPERS, other than as a retired annuitant solely for administrative recording keeping purposes (Employee will remain in retired status) and will report both the hours worked by Employee and pay pursuant to this Agreement. Employee understands and acknowledges that Government Code Section 21221(h) provides that a retired annuitant appointed to a vacant position pursuant to this subdivision shall not receive any benefits, incentives, compensation in lieu of benefits, or any other forms of compensation in addition to the hourly rate of compensation. Therefore, Employee will receive only the hourly wages described above, unless otherwise required by applicable law.

5.0 ANNUITANT’S REPRESENTATIONS AND WARRANTIES

5.1 Employee warrants that he has been retired for service, as defined in the Public Employees’ Retirement Law, for at least 180 days and that he therefore is eligible to be employed as a retired annuitant by the City.

5.2 Employee represents that he is currently not employed by any other CalPERS employer and has not worked for any other CalPERS employers this fiscal year. The City has no way of monitoring the hours that Employee works for another CalPERS employer. As such, it is Employee’s responsibility to ensure that the total hours worked for the City and any other CalPERS employer do not exceed 960 hours during any fiscal year. Employee agrees to notify the City if he comes within 40 hours of the cap.

5.3 Employee warrants that he has not received any unemployment insurance compensation arising out of prior public employment during the prior 12-month period prior to appointment.

6.0 BONDS AND INDEMNIFICATION

6.1 Indemnification. For the purposes of indemnification and defense of legal actions, Employee shall be considered an employee of the City and entitled to the same rights and subject to the same obligations as are provided for all other employees of the City, as required by the Government Code. Accordingly, to the extent mandated by the Government Code, the City shall defend, hold harmless, and indemnify Employee against any tort, professional liability, claim or demand, or other legal action arising out of an alleged act or omission occurring within the course and scope of Employee’s services under this Agreement, subject to the exceptions and exclusions provided by law.

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6.2 Bonds. City shall bear the full cost of any fidelity or other bonds, which may be required in the performance of Employee’s services under this Agreement.

7.0 NOTICES
Any notice required or permitted by this Agreement shall be in writing and shall be personally served or shall be sufficiently given when served upon the other party as sent by United States Postal Service, postage prepaid and addressed as follows:

To City: To Employee:

City Council Donald J. White
City of Lake Forest ADDRESS ON FILE 100 Civic Center Drive
Lake Forest, CA 92630
Notices shall be deemed given as of the date of personal service or upon the date of deposit in the course of transmission with the United States Postal Service.

8.0 GENERAL PROVISIONS

8.1 Entire Agreement. This Agreement represents the entire agreement between the parties and supersedes any and all other agreements, either oral or in writing, between the parties with respect to Employee’s employment by City and contains all of the covenants and agreements between the parties with respect to such employment. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, orally or otherwise, have been made by either party, or anyone acting on behalf of either party, which are not embodied herein, and that no other agreement, statement or promises not contained in this Agreement shall be valid or binding upon either party.

8.2 Assignment. This Agreement is not assignable by either the City or Employee.

8.3 Severability. In the event any provision of this Agreement is finally held or determined to be illegal or void by a court having jurisdiction over the Parties, the remainder of this Agreement shall remain in full force and effect unless the parts found to be illegal or void are wholly inseparable from the remaining portions of this Agreement.

8.4 Effect of Waiver. The failure of either party to insist on strict compliance with any of the terms, covenants, or conditions of this Agreement by the other party shall not be deemed a waiver of that term, covenant, or condition, nor shall any waiver or relinquishment of any right or power at any one time or times be deemed a waiver or relinquishment of that right or power for all or any other times.

8.5 Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of California, which are in full force and effect as of the date of execution. Any action to interpret or enforce the terms of this Agreement shall be held exclusively in a state court in Orange County, California. Employee expressly Item: 12
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waives any right to remove any such action from Orange County.

8.6 Effective Date. This Agreement shall become effective June 7, 2023, provided that by such date it has been approved by the City Council and signed by Employee and the Mayor.

8.7 Effect of Agreement on Employee’s CalPERS Retirement Benefits. City and Employee make this Agreement in compliance with applicable law for the hiring of a retired annuitant without reinstatement from retirement. However, the ultimate determination of this matter’s rests with CalPERS, and as such the City makes no representation on the impact, if any, this Agreement shall or may have upon his CalPERS retirement benefits, status, duties, and/or obligations. Employee acknowledges that in entering into this Agreement, he has not relied upon any such representations (none of which being in existence) in assessing the CalPERS-related impact of his employment. Therefore, Employee releases the City from any and all related claims or liabilities that may arise in connection with his employment pursuant to this Agreement.

8.8 Interpretation. This Agreement shall not be construed against the party or its representatives who drafted it or who drafted any portion thereof.

8.9 Authority. The persons executing this Agreement on behalf of the parties hereto warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Agreement on behalf of said party, (iii) by so executing this Agreement, such party is formally bound to the provisions of this Agreement, and (iv) the entering into this Agreement does not violate any provision of any other Agreement to which said party is bound.

8.10 Independent Legal Advice. City and Employee represent and warrant to each other that each has received legal advice from independent and separate legal counsel with respect to the legal effect of this Agreement, or have voluntarily chosen not to consult legal counsel, and, City and Employee further represent and warrant that each has carefully reviewed this entire Agreement and that each and every term thereof is understood and that the terms of this Agreement are contractual and not a mere recital.
[Signatures on following page]
Item: 12
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IN WITNESS WHEREOF, the City of Lake Forest has caused this Agreement to be signed and executed on its behalf by its Mayor, and duly attested by its officers thereunto duly authorized, and Employee has signed and executed this Agreement, all in triplicate.

CITY OF LAKE FOREST
Dated:

Doug Cirbo
Mayor
ATTEST:

Lisa Berglund
City Clerk
APPROVED AS TO FORM:

Matthew E. Richardson
City Attorney

EMPLOYEE
In signing this Agreement, Employee understands and agrees that he is an at-will, temporary employee, that his rights to employment with the City are governed by the terms and conditions of this Agreement rather than the ordinances, resolutions, and policies of the City which might otherwise apply to employees of the City and that he fully understands and agrees to all of the terms set forth in this Agreement. Further, Employee hereby certifies to the City of Lake Forest that he has not received unemployment insurance payments within the past 12 months arising from work performed as a retiree for any public employer. Employee further acknowledges that he was given the opportunity to consult with an attorney prior to signing this Agreement.

Dated:

Signed:

Donald J. White
Employee
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ATTACHMENT 2
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INTERIM DEPUTY CITY MANAGER

WHITE (“Employee”), an individual. The City and Employee may be referred to individually as a “Party” or collectively as the “Parties.”

R E C I T A L S
WHEREAS, City of Lake Forest (“City”) desires to hire Employee as a temporary, at- will employee for a definite period of time to serve in the position of Interim Deputy City Manager for the City of Lake Forest, California, which is a position that requires specialized skills, and Employee desires to perform and assume responsibility as the Interim Deputy City Manager on a temporary basis subject to the terms and conditions set forth in this Agreement; and
WHEREAS, the parties wish to have Employee perform the services of Interim Deputy City Manager, while the City conducts its recruitment for a permanent Deputy City Manager, and will terminate such services upon the City’s selection and hiring of a permanent Deputy City Manager; and
WHEREAS, the City is actively conducting a recruitment for a permanent Deputy City Manager;
and
WHEREAS, Government Code sections 7522.56 and 21221(h) permit retired annuitants under the California Public Employees’ Retirement System (“CalPERS”) to be employed without reinstatement from retirement upon appointment by a public agency to fill a vacant position on an interim basis during the recruitment to permanently fill the vacant position, if approved by the City Council; and
WHEREAS, Employee has served as a City Manager and in various other management positions with over forty years of Municipal experience, and those specialized skills are necessary to support the continuing operations of the City during the recruitment; and WHEREAS, the City wishes to establish the terms and conditions of Employee’s services to the City through this Agreement, in compliance with Government Code sections 7522.56 and 21221(h).

NOW, THEREFORE, in consideration of the mutual covenants contained herein, City and Employee hereby agree as follows:

Item: 12
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A G R E E M E N T

1.0 EMPLOYMENT & DUTIES

1.1 Duties. City hereby employs Employee as Interim Deputy City Manager for the City to perform the functions and duties of the Deputy City Manager and shall temporarily perform the functions of this position, which is a position involving highly- specialized and critically-needed skills as set forth in state law. Such employment is “at-will,” subject to the terms of this Agreement, and Employee shall perform said duties at the pleasure of the City Manager.

1.2 Work Schedule. Employee’s work hours under this Agreement will be on a part-time basis and generally limited to normal business hours of the City (Monday through Thursday, from 8:00 a.m. to 6:00 p.m., and Fridays from 8:00 a.m. to 5:00 p.m.). Employee and the City Manager will mutually agree to a schedule to meet the needs of the City. Employee will be required to keep accurate time records of his hours worked and be enrolled in the myCalPERS system as a retired annuitant to ensure that he does not exceed 960 hours worked within the fiscal years that occur during the term of this Agreement. In the position of Interim Deputy City Manager, work before or after normal business hours may be required. Employee shall attempt to flex his hours (starting late or ending early or scheduling time off during the week), so that he does not work over 40 hours in a workweek. If Employee determines that work over 40 hours in a workweek is required, Employee is required to notify the City Manager in advance, so that the matter may be reviewed as deemed necessary. Employee’s workweek begins/ends halfway through the workday on Fridays.

2.0 TERM

2.3 Transfer of Responsibilities. After Notice of Resignation or Termination, Employee shall cooperate with the City, as requested by the City, to effect a transition of Employee’s responsibilities and duties and to ensure that the City is aware of all matters being handled by Employee.

2.4 No Reappointment or Extension of Term. In accordance with state law and the requirements of the PERL, Employee may only be appointed to this position one time (single appointment).

3.0 COMPENSATION AND REIMBURSEMENT

3.2 No Other Benefits. Employee shall not receive any benefits, incentives, compensation in lieu of benefits, or any other forms of compensation.

3.3 Reimbursable Expenses. Employee shall be entitled to reimbursement of mileage for driving required in the course of his work (not commuting), in accordance with City policies for all employees. Employee shall not be entitled to reimbursement for any other costs or expenses incurred in the performance of Employee’s duties under this Agreement, unless said costs and expenses have received prior approval by the City Council, and are supported by written documentation in accordance with the established polices and customary practices of the City.

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4.0 CONDITIONS OF EMPLOYEE’S SERVICES AND ACKNOWLEDGMENT

OF NO BENEFITS

4.1 Conflicts Prohibited. During the term of this Agreement, Employee shall not engage in any business or transaction or maintain a financial interest which conflicts, or reasonably might be expected to conflict, with the proper discharge of Employee’s duties under this Agreement. Employee shall comply with all requirements of law, including but not limited to, Sections 87100 et seq., Section 1090 and Section 1125 of the Government Code, and all other similar statutory and administrative rules.

5.0 ANNUITANT’S REPRESENTATIONS AND WARRANTIES

As such, it is Employee’s responsibility to ensure that the total hours worked for the City and any other CalPERS employer do not exceed 960 hours during any fiscal year. Employee agrees to notify the City if he comes within 40 hours of the cap.

5.3 Employee warrants that he has not received any unemployment insurance compensation arising out of prior public employment during the prior 12-month period prior to appointment.

6.0 BONDS AND INDEMNIFICATION

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6.2 Bonds. City shall bear the full cost of any fidelity or other bonds, which may be required in the performance of Employee’s services under this Agreement.

To City: To Employee:

8.0 GENERAL PROVISIONS

8.2 Assignment. This Agreement is not assignable by either the City or Employee.

shall be held exclusively in a state court in Orange County, California. Employee expressly waives any right to remove any such action from Orange County.

8.6 Effective Date. This Agreement shall become effective June 7, 2023, provided that by such date it has been approved by the City Council and signed by Employee and the Mayor.

8.7 Effect of Agreement on Employee’s CalPERS Retirement Benefits. City and Employee make this Agreement in compliance with applicable law for the hiring of a retired annuitant without reinstatement from retirement. However, the ultimate determination of this matters rests with CalPERS, and as such the City makes no representation on the impact, if any, this Agreement shall or may have upon his CalPERS retirement benefits, status, duties, and/or obligations. Employee acknowledges that in entering into this Agreement, he has not relied upon any such representations (none of which being in existence) in assessing the CalPERS-related impact of his employment. Therefore, Employee releases the City from any and all related claims or liabilities that may arise in connection with his employment pursuant to this Agreement.

8.8 Interpretation. This Agreement shall not be construed against the party or its representatives who drafted it or who drafted any portion thereof.

CITY OF LAKE FOREST
Dated:

Doug Cirbo
Mayor
ATTEST:

Lisa Berglund
City Clerk
APPROVED AS TO FORM:

Matthew E. Richardson
City Attorney

EMPLOYEE
In signing this Agreement, Employee understands and agrees that he is an at-will, temporary employee, that his rights to employment with the City are governed by the terms and conditions of this Agreement rather than the ordinances, resolutions, and policies of the City which might otherwise apply to classified or other employees of the City and that he fully understands and agrees to all of the terms set forth in this Agreement. Further, Employee hereby certifies to the City of Lake Forest that he has not received unemployment insurance payments within the past 12 months arising from work performed as a retiree for any public employer.

Employee further acknowledges that he was given the opportunity to consult with an attorney prior to signing this Agreement.

Dated: Signed:

Donald J. White
Employee
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CITY COUNCIL AGENDA REPORT
MEETING DATE: 6/6/2023
DEPARTMENT: City Manager
SUBJECT:

SECOND AMENDMENT TO THE AGREEMENT WITH ALL CITY
MANAGEMENT SERVICES, INC.

RECOMMENDED ACTION(S):

1. Approve the Second Amendment to the Professional Services Agreement with All City Management Services, Inc.

2. Authorize the Mayor to sign, and the City Clerk to attest, the Second Amendment to the Professional Services Agreement substantially, in the form attached.

EXECUTIVE SUMMARY:

Since 2015, the City of Lake Forest has been providing crossing guard services near public schools throughout the city. All City Management Services, Inc., (“ACMS”) has been the crossing guard service provider. The City’s purchasing guidelines require that services over $30,000 require a formal bidding process.

On May 26, 2020, the City Manager authorized staff to solicit bids for crossing guard services. On July 7, 2020, the City entered into a three-year Professional Services Agreement with ACMS for crossing guard services with a $858,843 compensation amount (“Agreement”) (Attachment 1). On September 25, 2020, the City Council authorized the First Amendment to the Agreement (Attachment 2), which added a midday shift to the scope of services and increased the compensation amount to $940,479.66. The midday shift was implemented due to the “hybrid learning model” implemented by the Saddleback Valley Unified School District (“SVUSD”) in response to COVID-19. The Agreement is set to expire on July 8, 2023, unless the City Council authorizes the second and final one-year term extension described in the Agreement.

To ensure the continued provision of crossing guard services, staff recommends the City Council approve the proposed Second Amendment to the Agreement, which would extend the term by one year and add $376,822.80 in compensation (Attachment 3). The additional compensation amount will cover the costs of an additional year of crossing guard services as well as 29% increase in hourly rates for crossing guard personnel. If approved, the Second Amendment would bring the Agreement’s total compensation amount to $1,317,302.46 and extend the Item: 13
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term through July 8, 2024. There are sufficient funds in the proposed 2023-2025 Operating Budget to cover the costs of the recommended action.

BACKGROUND:

The City has contracted for crossing guard services near public schools at various locations throughout the city since incorporation. These services include providing equipped and trained personnel for crossing pedestrians in marked crosswalks, as well as supervisory personnel to ensure crossing guard activities are taking place at the required places and times.

On June 9, 2020, the City entered into the Agreement with ACMS with a $858,843 compensation amount over a three-year term (Attachment 1). On September 25, 2020, the City Manager authorized the First Amendment to the Agreement, which adjusted the scope of work to include a midday shift at each site and added $81,636.66 in compensation (Attachment 2). The midday shift was implemented in response to SVUSD’s hybrid school day model, which was temporarily in place during the COVID-19 pandemic. Pursuant to the Agreement, there are 23 crossing guard stations at 20 designated locations in the morning and afternoon during school days. Table 1 lists the locations of each guard, including the three intersections that have two guards providing service.

Table 1: Intersections
Lunette/Torino Dr Ridge Route/Trabuco Fawn Ridge/
Saddleback*
Rue De Fortuna/Fascia El Toro/Northcrest Pendleton/Saddleback Rue De Fortuna/Bake
Pkwy
Lake Forest/Pittsford Lake Forest/Trabuco
Los Alisos/Rockfield Pittsford/Charford Serrano/Winding Way Los Alisos/Muirlands Pittsford/Northcrest Ridge Route/Jeronimo* Landsview/Rockfield Dune Mear/Rockfield Rivendell/School Site Ridge Route/Serrano* El Rond/Ridge Route
*Denotes two guards at these locations
On August 16, 2021, SVUSD transitioned away from the hybrid learning model and resumed traditional in-person school hours. Crossing guard hours have since been adjusted to accommodate the shift back to traditional school instruction.

Pursuant to the Agreement, the City is charged on a per-hour basis for crossing guard services. Crossing guards provide one hour of service in the morning and one hour of service in the afternoon on school days. This is considered a “split shift” in the State of California. A split shift is a work schedule that is interrupted Item: 13
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by non-paid and non-working time, longer than a meal period or regular break and within the same workday. According to the California Department of Industrial Relations, a business is required to pay one hour of wages to employees making minimum wage for each split shift.

Community Satisfaction Study:

The 2023 Community Satisfaction Study conducted by True North Research reported that of those surveyed, 93% of respondents were “very satisfied” or “somewhat satisfied” with the City’s efforts to provide crossing guards near schools. This metric represents the third highest satisfaction score amongst all the police services surveyed with “maintaining a low crime rate” and “investigating criminal activity” tied at a 94% satisfaction rate.

DISCUSSION:

In anticipation of the July 8, 2023, term expiration of ACMS Agreement, staff is proposing the Second Amendment to the Agreement. The Second Amendment would increase the compensation amount in the Agreement by $376,822.80, which would bring the total compensation amount to $1,317,302.46. The Second Amendment would also extend the term of the Agreement by one year to July 8, 2024. The increased compensation amount would cover the costs of an additional year of service as well as a 29% increase in hourly rates charged for crossing guard staff services.

During discussions about the potential extension of the Agreement, ACMS communicated to staff that employee recruitment and retention have proved difficult. As a result, significant wage increases are needed to ensure adequate staffing is available to meet contract demands. Table 2 describes the history of hourly crossing guard rates and annual compensation.

Table 2: Contract Breakdown
Fiscal Year Hourly Rate Annual Cost
2020-21* $21.91 $353,759
2021-22 $23.62 $293,360
2022-23 $23.62 $293,360
2023-24 Proposed $30.34 $376,823
TOTAL COMPENSATION $1,317,302
*Included a majority of the “hybrid learning model period Pursuant to the City’s Purchasing and Contracting Guidelines (“Purchasing Guidelines”), staff complete a vendor assessment before a contract receives an Item: 13
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amendment extending the term. Since the inception of the Agreement with ACMS, staff have been satisfied with services provided. Staff’s assessment of ACMS’ performance is described in Table 3 below.

Table 3: Vendor Assessment ACMS
All City Management Services, Inc.

July 9, 2020 through May 31, 2023
Category Rating
Performance of Scope of Service Unsatisfied x Satisfied Very Satisfied N/A Timeliness Unsatisfied x Satisfied Very Satisfied N/A Budget Performance Unsatisfied x Satisfied Very Satisfied N/A Customer Service Unsatisfied x Satisfied Very Satisfied N/A Staff recommends that the City Council approve the Second Amendment to the Agreement with ACMS. If approved, the term of the ACMS Agreement would be extended through July 8, 2024, and the compensation amount would be increased to $1,317,302.46. The Second Amendment was written by the Finance Department and approved as to form by the City Attorney’s Office.

FISCAL IMPACT:

Approval of the Second Amendment to the Agreement would increase the compensation in the Agreement by $376,822.80 for a total compensation amount of $1,317,302.46. The Second Amendment would also extend the term of the Agreement to July 8, 2024. The increased compensation would cover the costs associated with another year of services and the increase in contract hourly rates charged by ACMS. There are sufficient funds available in the Proposed 2023- 2025 Operating Budget to cover the costs of the recommended action.

ATTACHMENTS:

1. Professional Services Agreement

2. First Amendment to the Professional Services Agreement

3. Second Amendment to the Professional Services Agreement Initiated By: Sharlyn De la Paz, Senior Management Analyst Submitted By: Sean McGovern, Assistant to the City Manager Approved By: Debra Rose, City Manager
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CITY COUNCIL AGENDA REPORT
MEETING DATE: 6/06/2023
DEPARTMENT: Finance
SUBJECT:

AWARD OF CONTRACT FOR FINANCIAL AND SPECIAL AUDIT SERVICES RECOMMENDED ACTION(S):

1. Award Professional Consultant Services Agreement to CliftonLarsonAllen LLP (“CLA”) in the amount of $233,060.00 for Financial and Special Audit Services.

2. Authorize the Mayor to sign, and the City Clerk to attest, the agreement with CLA, substantially in the form attached.

EXECUTIVE SUMMARY:

The City utilizes the services of an audit firm to perform the audits of financial statements, conduct special auditing services, and assist staff with auditing issues that may arise during the year. The City’s most recent agreement with the firm CliftonLarsonAllen LLP (“CLA”) for these services expired May 31, 2023.

Following a Request for Proposals (“RFP”) process, staff recommends awarding a new agreement to CLA to perform financial and special audit services under an initial three year-term with three optional one-year extensions (“Agreement”). Per the Financial Management and Budgetary Policy, the City shall select the independent auditing firm via a competitive selection process, such as an RFP, at least once every six years. Therefore, the proposed agreement may be extended annually up to three additional times following the initial three-year terms.

The proposed Agreement also includes sufficient compensation for the base scope of services and additional special audit services that may be required during the term of the agreement. While these services may not be required each and every year, the proposed Agreement contains sufficient compensation for any optional or additional services required in a given year. The Agreement has been reviewed by the City Attorney and approved as to form. The proposed 2023-2025 Operating Budget includes sufficient funds for the completion of the financial audit and any required optional or special services to be rendered under the proposed Agreement.

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BACKGROUND:

A financial audit is mandatory for the City to remain in compliance with state and federal regulations. Auditors provide assurance that the financial statements comply with Generally Accepted Accounting Principles (“GAAP”) and meet regulatory standards. The financial audit provides transparency to the public regarding how the City is spending taxpayer dollars. The audit report highlights any discrepancies or financial irregularities that help ensure accountability.

A financial audit reviews and evaluates the effectiveness of the internal controls of the local government. The auditor examines the City's financial policies and procedures for accuracy, completeness, and regulatory compliance. Any internal control weaknesses identified by the auditor can be remedied to prevent fraud, error, or waste of government resources. A financial audit enhances public trust in the City by providing unbiased, reliable, and transparent financial information.

It helps to demonstrate the government's commitment to sound financial management, which builds trust and confidence in the public.

The City contracts with a Certified Public Accounting ("CPA") firm to perform financial and special audits at the end of each fiscal year. The financial audit is comprised of the City's basic financial statements, the Lake Forest Housing Authority, and the Air Quality Management District Special Revenue Fund. In addition to auditing the previously stated components, the financial audit includes preparation of the financial statements, testing of the GANN limit, preparation of the Comprehensive Annual Financial Report, and availability during the year as a resource for technical accounting issues that may arise.

Special audits include single audits of federal funds if required, auditing franchise agreements (Golf Center lease and waste hauler) and auditing hotels for transient tax occupancy compliance. Three optional audit services were included for the first time in the current contract: Annual Street Report, Financial Transactions Report, and Rancho Cañada Financing Authority Special District Financial Transactions Report. These reports are submitted to the State Controller’s Office each year and had previously been prepared by staff.

The independent auditing firm that has provided auditing services to the City since 2017 is CliftonLarsonAllen, LLP (“CLA”), formally known as White Nelson Diehl Evans LLP (“WNDE”). WNDE was awarded the agreement for the services following the City’s completion of a Request for Proposal (“RFP”) process for Financial and Special Audit Service in June 2016. The term of the previous Agreement with CLA began June 1, 2017, and expired May 31, 2023, as no additional contract term extensions were available. Table 1 contains a summary of the previous agreement and amendments.

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Table 1: Previous Agreement and Related Amendments for Financial and Special Audit Services
Agreement Description/ Additional
Compensation
Term
Expiration
Date
Total Change to
Not-to-Exceed
Compensation
Original Agreement –
November 1, 2016 Initial 3-Year Term May 31, 2020 $191,000 First Amendment
– May 5, 2020
First Optional One-Year
Extension May 31, 2021 $65,500
Addendum
– December 2020
Acknowledgement of name
change from WNDE to CLA May 31, 2021 No Change
Second Amendment
– May 18, 2021
Second Optional One-Year
extension May 31, 2022 $69,491
Third Amendment –
May 19, 2022
Third Optional One-Year
Extension May 31, 2023 No Change
Total Final Compensation $325,991
The previous agreement expired prior to entering into a new agreement based on the timing of the RFP. To provide potential proposers with the best available information applicable to the proposed services, the release of the RFP was coordinated with the completion of the prior year audit process. The Fiscal Year 2021-22 audit was completed on March 31, 2023.

DISCUSSION:

The City’s Financial Management and Budgetary Policy requires a formal procurement for financial audit services at least every six years. The proposed scope of services covers three fiscal years commencing with the Fiscal Year 2022-23 audit and includes three optional one-year term extensions to cover through the Fiscal Year 2027-2028 audit.

The proposed scope of work includes optional services as outlined in the RFP.

These optional audit services may not be used each and every year of the contract term but are included as part of the scope of work to provide greater flexibility.

The City Manager reviewed and approved an RFP for Financial and Special Audit Services to be released on April 14, 2023. Three proposals we received in response to the RFP from Badawi & Associates (“Badawi”), CliftonLarsonAllen LLP (“CLA”), and SingerLewak LLP(“SignerLewak”).

Consistent with the City’s Purchasing and Contracting Guidelines (“Purchasing Guidelines”), staff assembled a selection committee approved by the City Manager to review proposals and participate in the interview phase do the selection process. The selection committee was comprised of the following staff:

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•Director of Finance
•Assistant Director of Finance
•Accounting Supervisor
•Senior Management Analyst, City Manager’s Office
The review process is comprised of three phases: the Technical Review of written proposals, the Qualifications Interview, and the Revised Cost Proposal evaluation. A firm must receive an average of 60 points (60%) or higher, in the Technical Review phase to move on to the Qualifications Interview phase. Both firms scored at least a 60-point average score from the Technical Proposal Review.

Pursuant to the City’s Purchasing Guidelines, the City invited the firms that scored a minimum of 60 points for an interview to discuss their respective approaches to the requested services. Interviews were conducted May 15, 2023.

The results of the technical review and interview phases are summarized in Table 2.

Table 2: Financial and Special Audit Services RFP Firms and Scores 2023-08 RFP Financial Audit Services
Technical Review Qualifications Interview
Rater: Rater:

Firm 1 2 3 4 Sub -
Total 1 2 3 4 Sub -
Total
Pricing
Points
x 4 Total
Badawi 70 90 84 64 308 103 134 54 55 346 160 506
CLA 74 92 90 84 340 103 153 135 146 537 128 665
Signer
Lewak 60 69 81 52 262 94 112 48 42 296 136 432
Following the Qualifications Interviews and subsequent scoring by the selection committee, the Purchasing Coordinator reviewed the cost proposals, which are summarized in Table 3. The impact of cost on the total scoring is reflected in the previous Table 2.

Table 3: Costing Analysis for Base Scope of Services for Initial 3-year Term Pricing Scoring Calculation Points
Proposal Price 40
Lowest Price

$141,475.00 40
Badawi

$141,475.00 40
CLA

$176,530.00 32
SingerLewak

$167,050.00 34
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The total proposal price for each firm is based on each firm’s final cost proposal and includes the fees for the base scope of services during an initial three-year term of services, as described in the RFP. These services include:
•Financial Statements Audit
•Single Audit
•GANN Limit
•Lake Forest Housing Authority Audit
•SCAQMD Revenue Fund Audit
•Additional Fees to complete Base Scope Only
The RFP includes optional services that may not be used each and every year of the contract term. These services were included to request the cost of providing these services should they be required in a given year.

Including the cost proposal component, CLA received the highest number of points and the highest ranking in the proposal review process. CLA received a total of 665 points, placing them in the Qualified, Advantageous category. Badawi followed in the ranking with 506 points in the Qualified, Not Advantageous category with SingerLewak ranked last at 432 points in the Qualified, Not Suitable category.

As a firm, CLA has more than 60 years in the business and extensive experience serving similar governmental entities. With a focus on providing industry specialized insight and resources and consistent, dependable services, CLA demonstrates the necessary knowledge and experience for providing financial and special audit services to the City.

Staff recommends the City Council award the proposed Agreement to CLA with a not-to-exceed compensation amount of $233,060 (Attachment 1). The proposed Agreement includes the base scope of services for the initial three-year term as well as enough compensation for optional and additional services that may be rendered during the initial three-year term and at the direction of the City. These services are included to provide the ability to perform these services should they be required in a given year under the proposed Agreement. While all optional and additional services may not be used every year, multiple combinations of optional and additional services may be required. Oftentimes, staff learns of the need for these services throughout multiple different times of the year rendering service needs as irregular and difficult to anticipate in advance.

The proposed Agreement includes sufficient compensation should an optional service be required during a specific year. Table 4 includes a breakdown of the additional optional and additional services that may be required each year.

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Table 4: Compensation for Base Scope of Services, Optional Services, and Additional Services, Initial Term
Year 1
FY 2022-23
Audit
Year 2
FY 2023-
24 Audit
Year 3
FY 2024-
25 Audit
Total
Compensation
(Initial 3 Years)
Base Scope of Services
Fixed Audit Fee For Core
Services Sub Total $57,495 $59,685 $59,350 $176,530
Optional Services
Fixed Fee for Additional
Required Major Program Single
Audit
$4,500 $4,680 $4,870 $14,050
City's Annual Street Report $1,740 $1,810 $1,880 $5,430 City's Annual Financial
Transaction Report $4,920 $5,120 $5,320 $15,360
One-Time Account Conversion
for City SCO $2,000 $ - $ - $2,000
Rancho Cañada Financing
Authority Annual Financial
Transactions Report
$1,080 $1,120 $1,160 $3,360
Tech Fee - One-Time Services $100 $ - $ - $100
Tech Fee $390 $410 $430 $1,230
Sub Total $14,730 $13,140 $13,660 $41,530
Additional Services
Annual Amount for Additional
Services $5,000 $5,000 $5,000 $15,000
Total Annual Compensation -
All Fixed Fee, Optional, and
Additional Services
$77,225 $77,825 $78,010 $233,060
Total Compensation Original Agreement (Years 1-3) $233,060 The proposed Agreement also contains fees and rates for the future optional three one-year extensions that should go into effect should the City authorize each optional one-year extension in years 2026, 2027, and 2028.

The proposed Agreement was drafted by Finance staff and has been reviewed by the City Attorney and approved as to form. The term of the Agreement is for three years with three optional one-year extensions, as permitted by the Financial Management and Budgetary Policy.

Staff conducted a reference check (Attachment 2) with other government agencies that have contracted with CLA for Financial and Special Audit Services.

Staff found the reference check to be positives and overall indicative of an effective and useful service offering.

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FISCAL IMPACT:

The proposed 2023-2025 Operating Budget includes sufficient funds for the completion of the financial audit and any required optional or special services to be rendered under the proposed Agreement.

ATTACHMENTS:

1. Professional Consultant Services Agreement with CLA

2. Reference Check for CLA
Initiated By: Kevin Shirah, Director of Finance/City Treasurer Submitted By: Debra Rose, City Manager
Approved By: Debra Rose, City Manager
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ATTACHMENT 1
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(BB&K 2019)
55136.00200\31918793.1 -1-

CITY OF LAKE FOREST

PROFESSIONAL CONSULTANT SERVICES AGREEMENT

1. PARTIES AND DATE.

This Agreement is made and entered into this [***INSERT DAY***] day of [***INSERT MONTH***], [***INSERT YEAR***], by and between the City of Lake Forest, a municipal corporation, organized under the laws of the State of California, with its principal place of business at 100 Civic Center Drive, Lake Forest, California, 92630 ("City") and CliftonLarsonAllen LLP (CLA), a California Limited Partnership, with its principal place of business at 2875 Michelle Drive, Suite 300; Irvine, CA 92606 ("Consultant"). City and Consultant are sometimes individually referred to herein as "Party" and collectively as "Parties."

2. RECITALS.

2.1 Consultant.

Consultant desires to perform and assume responsibility for the provision of certain professional financial audit consulting services required by the City on the terms and conditions set forth in this Agreement. Consultant represents that it is experienced in providing professional financial audit consulting services to public clients, is licensed in the State of California, and is familiar with the plans of City.

2.2 Project.

City desires to engage Consultant to render such professiona l financial audit consulting services for the Financial Audit Services project ("Project") as set forth in this Agreement.

3. TERMS.

3.1 Scope of Services and Term.

3.1.1 General Scope of Services. Consultant promises and agrees to furnish to the City all labor, mater ials, tools, equipment, services, and incidental and customary work necessary to fully and adequately supply the professional financial audit consulting services necessary for the Project ("Services"). The Services are more particularly described in Exhi bit "A" attached hereto and incorporated herein by reference. All Services shall be subject to, and performed in accordance with, this Agreement, the exhibits attached hereto and incorporated herein by reference, and all applicable local, state and federal laws, rules and regulations.

3.1.2 Term. The term of this Agreement shall be from July 1, 2023 to June 20, 2026, unless earlier terminated as provided herein. The City shall have the unilateral option, at its sole discretion, to renew this Agreement automa tically for no more than three (3) additional one-year terms. Consultant shall complete the Services within the term of this Agreement, and shall meet any other established schedules and deadlines.

3.2 Responsibilities of Consultant.

3.2.1 Independent Contractor; Co ntrol and Payment of Subordinates . The DocuSign Envelope ID: 0D07E300-8D97-4F8F-B68E-24E372B6839E Item: 14
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(BB&K 2019)
55136.00200\31918793.1 -2-

Services shall be performed by Consultant or under its supervision. Consultant will determine the means, methods and details of performing the Services subject to the requirements of this Agreement. City retains Consultant on an independent contractor basis and not as an employee.

Consultant retains the right to perform similar or different services for others dur ing the term of this Agreement. Any additional personnel performing the Services under this Agreement on behalf of Consultant shall also not be employees of City and shall at all times be under Consultant's exclusive direction and control. Neither City, nor any of its officials, officers, directors, employees or agents shall have control over the conduct of Consultant or any of Consultant's officers, employees, or agents, except as set forth in this Agreement. Consultant shall pay all wages, salaries, and other amounts due such personnel in connection with their performance of Services under this Agreement and as required by law. Consultant shall be responsible for all reports and obligations respecting such additional personnel, including, but not limited to: social security taxes, income tax withholding, unemployment insurance, disability insurance, and workers' compensation insurance.

3.2.2 Schedule of Services. Consultant shall perform the Services expeditiously, within the term of this Agreement, and in ac cordance with the Schedule of Services set forth in Exhibit "B" attached hereto and incorporated herein by reference. Consultant represents that it has the professional and technical personnel required to perform the Services in conformance with such conditions. In order to facilitate Consultant's conformance with the Schedule, City shall respond to Consultant's submittals in a timely manner. Upon request of City, Consultant shall provide a more detailed schedule of anticipated performance to meet the Schedule of Services.

3.2.3 Conformance to Applicable Requirements . All work prepared by Consultant shall be subject to the approval of City.

3.2.4 Substitution of Key Personnel . Consultant has represented to City that certain key personnel will perform and coordinate the Services under this Agreement. Should one or more of such personnel become unavailable, Consultant may substitute other personnel of at least equal competence upon written approval of City. In the event that City and Consultant cannot agree as to th e substitution of key personnel, City shall be entitled to terminate this Agreement for cause. As discussed below, any personnel who fail or refuse to perform the Services in a manner acceptable to the City, or who are determined by the City to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project or a threat to the safety of persons or property, shall be promptly removed from the Project by the Consultant at the request of the City. The key personnel for performance of this Agreement are as follows: Kassie Radermacher, CPA, CFE, Principal, and Rob Perl, CPA, Manager.

3.2.5 City's Representative. The City hereby designates Kevin Shirah, Director of Finance/ City Treasurer, or his designee, to act as its representative in all matters pertaining to the administration and performance of this Agreement ("City's Representative"). City's Representative shall have the power to act on behalf of the City for review and approval of all products submitted by Consultant but not the authority to enlarge the Scope of Work or change the total compensation due to Consultant under this Agreement. The City Manager shall be authorized to act on City's behalf and to execute all necessary documents which enlarge the Scope of Work or change the Consultant's total compensation subject to the provisions contained in Section 3.3 of this Agreement. Consultant shall not accept direction or orders from any person other than the City Manager, City's Representative or his/her designee.

3.2.6 Consultant's Representative . Consultant hereby designates Kassie DocuSign Envelope ID: 0D07E300-8D97-4F8F-B68E-24E372B6839E Item: 14
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Radermacher, CPA, CFE, Principal , or her designee, to act as its representative for the performance of this Agreement ("Consultant's Representative"). Consultant's Representative shall have full authority to represent and act on behalf of the Consultant for all purposes under this Agreement. The Consultant's Representative shall supervise and direct the Services, using his/her best skill and attention, and shall be responsible for a ll means, methods, techniques, sequences, and procedures and for the satisfactory coordination of all portions of the Services under this Agreement.

3.2.7 Coordination of Services. Consultant agrees to work closely with City staff in the performance of Services and shall be available to City's staff, consultants and other staff at all reasonable times.

3.2.8 Standard of Care; Performance of Employees. Consultant shall perform all Services under this Agreement in a skillful and competent manner, consistent with the standards generally recognized as being employed by professionals in the same discipline in the State of California. Consultant represents and maintains that it is skilled in the professional calling necessary to perform the Services. Consultant warrants t hat all employees and subconsultants shall have sufficient skill and experience to perform the Services assigned to them. Finally, Consultant represents that it, its employees and subconsultants have all licenses, permits, qualifications and approvals of whatever nature that are legally required to perform the Services, and that such licenses and approvals shall be maintained throughout the term of this Agreement.

As provided for in the indemnification provisions of this Agreement, Consultant shall perfor m, at its own cost and expense and without reimbursement from the City, any services necessary to correct errors or omissions which are caused by the Consultant's failure to comply with the standard of care provided for herein. Any employee of the Consultant or its sub-consultants who is determined by the City to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project, a threat to the safety of persons or property, or any employee who fails or refuses to perform the Services in a manner acceptable to the City, shall be promptly removed from the Project by the Consultant and shall not be re -employed to perform any of the Services or to work on the Project.

3.2.9 Laws and Regulations. Consultant shall keep itself fully informed of and in compliance with all local, state and federal laws, rules and regulations in any manner affecting the performance of the Project or the Services, including all Cal/OSHA requirements, and shall give all notices required by law. Consultant shall be liable for all violations of such laws and regulations in connection with Services. If Consultant performs any work knowing it to be contrary to such laws, rules and regulations, Consultant shall be solely responsible for all costs arising therefrom. Co nsultant shall defend, indemnify and hold City, its officials, directors, officers, employees, agents, and volunteers free and harmless, pursuant to the indemnification provisions of this Agreement, from any claim or liability arising out of any failure or alleged failure to comply with such laws, rules or regulations.

3.2.10 Safety. Consultant shall execute and maintain its work so as to avoid injury or damage to any person or property. In carrying out its Services, the Consultant shall at all times be in compliance with all applicable local, state and federal laws, rules and regulations, and shall exercise all necessary precautions for the safety of employees appropriate to the nature of the work and the conditions under which the work is to be performed. Safe ty precautions, where applicable, shall include, but shall not be limited to: (A) adequate life protection and lifesaving equipment and procedures; (B) instructions in accident prevention for all employees and subconsultants, such as safe walkways, scaffo lds, fall protection ladders, bridges, gang planks, DocuSign Envelope ID: 0D07E300-8D97-4F8F-B68E-24E372B6839E Item: 14
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confined space procedures, trenching and shoring, equipment and other safety devices, equipment and wearing apparel as are necessary or lawfully required to prevent accidents or injuries; and (C) adequate facilities for the proper inspection and maintenance of all safety measures.

3.2.11 Insurance. Consultant agrees to procure and maintain, at Consultant’s expense all insurance specified in Exhibit “D” attached hereto and by this reference incorporated herein. C onsultant shall require all subconsultants to carry the same policies and limits of insurance that the Consultant is required to maintain, unless otherwise approved in writing by the City.

3.2.12 Water Quality Management and Compliance. Not applicable.

3.3 Fees and Payments.

3.3.1 Compensation. Consultant shall receive compensation, including authorized reimbursements, for all Services rendered under this Agreement at the rates set forth in Exhibit "C" attached hereto and incorporated herein by reference. The total compensation shall not exceed TWO HUNDRED THIRTY -THREE THOUSAND SIXTY DOLLARS ($233,060.00) without written approval of the City Council or City Manager as applicable. Extra Work may be authorized, as described below, and if authorized, will be compensated at t he rates and manner set forth in this Agreement.

3.3.2 Payment of Compensation . Consultant shall submit to City a monthly invoice which indicates work completed and hours of Services rendered by Consultant. The invoice shall describe the amount of Services pro vided since the initial commencement date, or since the start of the subsequent billing periods, as appropriate, through the date of the invoice.

City shall, within 30 days of receiving such invoice, review the invoice and pay all non -disputed and approved charges thereon. If the City disputes any of Consultant's fees, the City shall give written notice to Consultant within thirty (30) days of receipt of an invoice of any disputed fees set forth therein.

3.3.3 Reimbursement for Expenses. Consultant shall not be reimbursed for any expenses unless authorized in writing by City, or included in Exhibit "C" of this Agreement.

3.3.4 Extra Work . At any time during the term of this Agreement, City may request that Consultant perform Extra Work. As used herein, "Extra Work" means any work which is determined by City to be necessary for the proper completion of the Project, but which the Parties did not reasonably anticipate would be necessary at the execution of this Agreement.

Consultant shall not perform, nor be compensat ed for, Extra Work without written authorization from the City.

3.3.5 Rate Increases. In the event that this Agreement is renewed pursuant to Section 3.1.2, the rate set forth in Exhibit “C” may be adjusted each year at the time of renewal as set forth in Exhibit “C.”

3.4 Labor Code Requirements.

3.4.1 Prevailing Wages. Not applicable.

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3.4.2 Registration. Not applicable.

3.5 Accounting Records.

3.5.1 Maintenance and Inspection . Consultant shall maintain complete and accurate records with respect to all costs and expenses incurred under this Agreement. All such records shall be clearly identifiable. Upon request of the City, Consultant will provide copies of applicable time and expense records related to the service.

3.5.2 Ownership of Workpapers . The workpapers and files supporting the services Consultant perform are the sole and exclusive property of Consultant and constitute confidential and proprietary information. Consultant do es not provide access to its workpapers and files to City or anyone else in the normal course of business. Unless required by law or regulation to the contrary, Consultant retains its workpapers and files in accordance with its records retention policy tha t typically provides for a retention period of seven years. After this period expires, Consultant’s workpapers and files will be destroyed. Furthermore, physical determination or catastrophic events may shorten the time Consultant’s records are available.

The workpapers and files of Consultant are not a substitute for City’s records.

3.5.3 Access of Workpapers to Regulators . Pursuant to authority given by law, regulation or professional standards, Consultant may be requested to make certain workpapers and files available to a regulator for its regulatory oversight purposes. Consultant will notify City of any such request, if permitted by law. Access to the requested workpapers and files will be provided to the regulator under the supervision of Consultant pe rsonnel and at a location designated by Consultant. Furthermore, Upon request, Consultant may provide copies of selected workpapers and files to such regulator. The regulator may intend, or decide, to distribute the copies or information contained therein to others, including other governmental agencies.

3.6 General Provisions.

3.6.1 Termination of Agreement.

3.6.1.1 Grounds for Termination . City may, by written notice to Consultant, terminate the whole or any part of this Agreement at any time and without cause by giving written notice to Consultant of such termination, and specifying the effective date thereof, at least seven (7) days before the effective date of such termination. Upon termination, Consultant shall be compensated only for those services which have been adequately rendered to City, and Consultant shall be entitled to no further compensation. Consultant may not terminate this Agreement except for cause.

3.6.1.2 Effect of Termination . If this Agreement is terminated as provided herein, City may require Consultant to provide all finished or unfinished Documents and Data and other information of any kind prepared by Consultant, which have been paid for in full, in connection with the performance of Services under this Agreement. Consultant shall be required to provide such document and other information within fifteen (15) days of the request.

Notwithstanding the forgoing, in the event an engagement is terminated before completion, copies of incomplete workpapers will not be provided.

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3.6.1.3 Additional Services. In the ev ent this Agreement is terminated in whole or in part as provided herein, City may procure, upon such terms and in such manner as it may determine appropriate, services similar to those terminated.

3.6.1.4 Delivery of Notices. All notices permitted or required under this Agreement shall be given to the respective parties at the following address, or at such other address as the respective parties may provide in writing for this purpose:

Consultant: CliftonLarsonAllen LLP (CLA)
2875 Michelle Drive, Suite 300
Irvine, CA 92606
ATTN: Kassie Radermacher, CPA, CFE, Principal
City: City of Lake Forest
100 Civic Center Drive
Lake Forest, CA 92630
ATTN: City Clerk
Such notice shall be deemed made when personally delivered or when mailed, forty -eight (48) hours after deposit in the U.S. Mail, first class postage prepaid and addressed to the party at its applicable address. Actual notice shall be deemed adequate notice on the date actual notice occurred, regardless of the method of service.

3.6.2 Ownership of Materials and Confidentiality.

3.6.2.1 Documents & Data; Licensing of Intellectual Property . This Agreement creates a non-exclusive and perpetual license for City to copy, use, modify, reuse, or sublicense any and all copyrights, designs, and other intellectual property embodi ed in plans, specifications, studies, drawings, estimates, and other documents or works of authorship fixed in any tangible medium of expression, including but not limited to, physical drawings or data magnetically or otherwise recorded on computer diskett es, which are prepared or caused to be prepared by Consultant under this Agreement ("Documents & Data"). Consultant shall require all subconsultants to agree in writing that City is granted a non -exclusive and perpetual license for any Documents & Data the subconsultant prepares under this Agreement. Consultant represents and warrants that Consultant has the legal right to license any and all Documents & Data.

Consultant makes no such representation and warranty in regard to Documents & Data which were prepared by design professionals other than Consultant or provided to Consultant by the City. City shall not be limited in any way in its use of the Documents & Data at any time, provided that any such use not within the purposes intended by this Agreement shall be at City's sole risk.

Notwithstanding the forgoing the use of any deliverables under the applicable Scope of Services is subject to the terms of the Scope of Services.

3.6.2.2 Confidentiality. All ideas, memoranda, specifications, plans, procedures, draw ings, descriptions, computer program data, input record data, written information, and other Documents & Data either created by or provided to Consultant in connection with the performance of this Agreement shall be held confidential by Consultant. Such materials shall not, without the prior written consent of City, be used by Consultant for any purposes other than the performance of the Services. Nor shall such materials be disclosed to any person or entity not connected with the performance of the Services or the Project. Nothing furnished to Consultant which is otherwise known to Consultant or is generally known, or has DocuSign Envelope ID: 0D07E300-8D97-4F8F-B68E-24E372B6839E Item: 14
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become known, to the related industry shall be deemed confidential. Consultant shall not use City's name or insignia, photographs of the Project, or any publicity pertaining to the Services or the Project in any magazine, trade paper, newspaper, television or radio production or other similar medium without the prior written consent of City.

3.6.2.3 Confidential Information. The City shall refrain from releasing Consultant’s proprietary information ("Proprietary Information") unless the City's legal counsel determines that the release of the Proprietary Information is required by the California Public Records Act or other applicable state or federal law, or order of a court of competent jurisdiction, in which case the City shall notify Consultant of its intention to release Proprietary Information.

Consultant shall have five (5) working days after receipt of the Release Notice to give City written notice of Consultant's objection to the City's release of Proprietary Information. Consultant shall indemnify, defend and hold harmless the City, and its officers, directors, employees, and agents from and against all liability, loss, cost or expense (including attorney’s fees) arising out of a legal action brought to compel the release of Proprietary Information. City shall not release the Proprietary Information after receipt of the Objection Notice unless either: (1) Consultant fails to fully indemnify, defend (with City's choice of legal counsel), and hold City harmless from any legal action brought to compel such release; and/or (2) a final and non-appealable order by a court of competent jurisdiction requires that City release such information. (A) Consultant will not disclose any of City’s confidential, proprietary, or privileged information to any person or party, unless City authorizes Consultant to do so, it is published or released by City, it becomes publicly known or available other than through disclosure by Consultant, or disclosure is required by law, regulation or professional standard.

This confidentiality provision does not prohibit Consultant from disclosing City’s information to one of more of our affiliated companies in order to provid e services that City has requested from Consultant or from any such affiliated company. Any such affiliated company Shall be subject to the same restrictions ton the use and disclosure of City’s Information as apply to Consultant. City also consent to our disclosure of information regarding the nature of services Consultant provides to City to another independent network member of CLA Global, for the limited purpose of complying with professional obligations regarding independence and conflicts of interest. (B) Consultant may, at times, utilize external web applications to receive and process information from its clients; however, any sensitive data, including protected health information and personally identifiable information, must be redacted by City to the maximum extent possible prior to uploading the document or file. In the event that City is unable to remove or obscure all sensitive data, please contact Consultant to discuss other potential options for transmitting the document or file. (C) During the course of the engagement, there may be
communication via fax or email. City is responsible to ensure that communications received by City or its personnel are secured and not shared with unauthorized individuals. (D) Consultant regularly aggregate anonymized client data and perform a variety of analyses using that aggregated data. Some of these analyses are published to clients or released publicly. However, Consultant is always careful to preserve the confidentiality of the separate information that Consultant obtains from each client, as required by the AICPA Code of Professional Conduct and various laws. City’s acceptance of this Agreement will serve as its consent to our use of anonymized data in performing reporting on the cost comparison, performance indicator and/or benchmarking analyses.

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(E) Consultant may, at times, use third -party software applications to perform services under this agreement

3.6.3 Cooperation; Further Acts . The Parties shall fully cooperate with one another, and shall take any additional acts or sign any additional documents as may be necessary, appropriate or convenient to attain the purposes of this Agreement.

3.6.4 Attorney's Fees. If either party commences an action against the other party, either legal, administrative or otherwise, arising out of or in connection with this Agreement, the prevailing party in such litigation shall be entitled to have and recover from the losing party reasonable attorney's fees and all other costs of such action.

3.6.5 Indemnification.

To the fullest extent permitted by law, Consultant shall defend, indemnify and hold the City, its officials, officers, employees, volunteers and agents free and harmless from any and all claims, demands, causes of action, costs, expenses, liability, loss, damage or injury of any kind, in law or equity, to property or persons, including wrongful death, in any manner arising out of, pertaining to, or incident to gross negligence and willful misconduct of Consultant, its officials, officers, employees, subcontractors, consultants or agents in connection with the performance of the Consultant's Services, the Project or this Agreement, including without limitation the payment of all damages, expert witness fees and attorneys fees and other related costs and expenses.

If Consultant’s obligation to defend, indemnify, and/or hold harmless arises out of Consultant’s performance as a “design professional ” (as that term is defined under Civil Code section 2782.8), then, and only to the extent required by Civil Code section 2782.8, which is fully incorporated herein, Consultant’s indemnification obligation shall be limited to claims that arise out of, pertain to, or relate to the negligence, recklessness, or w illful misconduct of the Consultant, and, upon Consultant obtaining a final adjudication by a court of competent jurisdiction, Consultant’s liability for such claim, including the cost to defend, shall not exceed the Consultant’s proportionate percentage of fault.

3.6.6 Entire Agreement. This Agreement contains the entire Agreement of the parties with respect to the subject matter hereof, and supersedes all prior negotiations, understandings or agreements. This Agreement may only be modified by a writing signed by both parties.

3.6.7 Governing Law. This Agreement shall be governed by the laws of the State of California. Venue shall be in Orange County.

3.6.8 Time of Essence. Time is of the essence for each and every provision of this Agreement.

3.6.9 City's Right to Employ Oth er Consultants. City reserves right to employ other consultants in connection with this Project.

3.6.10 Successors and Assigns . This Agreement shall be binding on the successors and assigns of the parties.

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3.6.11 Assignment or Transfer . Consultant shall not assign, h ypothecate, or transfer, either directly or by operation of law, this Agreement or any interest herein without the prior written consent of the City. Any attempt to do so shall be null and void, and any assignees, hypothecates or transferees shall acquire no right or interest by reason of such attempted assignment, hypothecation or transfer.

3.6.12 Construction; References; Captions. Since the Parties or their agents have participated fully in the preparation of this Agreement, the language of this Agreement sha ll be construed simply, according to its fair meaning, and not strictly for or against any Party. Any term referencing time, days or period for performance shall be deemed calendar days and not work days. All references to Consultant include all personnel, employees, agents, and subconsultants of Consultant, except as otherwise specified in this Agreement. All references to City include its elected officials, officers, employees, agents, and volunteers except as otherwise specified in this Agreement. The captions of the various articles and paragraphs are for convenience and ease of reference only, and do not define, limit, augment, or describe the scope, content, or intent of this Agreement.

3.6.13 Amendment; Modification. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing and signed by both Parties.

3.6.14 Waiver. No waiver of any default shall constitute a waiver of any other default or breach, whether of the same or other covenant or condition. No waiver, bene fit, privilege, or service voluntarily given or performed by a Party shall give the other Party any contractual rights by custom, estoppel, or otherwise.

3.6.15 No Third -Party Beneficiaries . There are no intended third party beneficiaries of any right or obligation assumed by the Parties.

3.6.16 Invalidity; Severability. If any portion of this Agreement is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect.

3.6.17 Prohibited Interests . Consultant maintains and warrants that it has not employed nor retained any company or person, other than a bona fide employee working solely for Consultant, to solicit or secure this Agreement. Further, Consultant warrants that it has no t paid nor has it agreed to pay any company or person, other than a bona fide employee working solely for Consultant, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement. For breach or violation of this warranty, City shall have the right to rescind this Agreement without liability. For the term of this Agreement, no member, officer or employee of City, during the term of his or her service with City, shall hav e any direct interest in this Agreement, or obtain any present or anticipated material benefit arising therefrom.

3.6.18 Equal Opportunity Employment. Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcon sultant, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. Such non -discrimination shall include, but not be limited to, all activities related to initial employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination. Consultant shall also comply with all relevant provisions of City's Minority Business Enterprise program, Affirmative Action Plan or other related programs or guidelines currentl y in DocuSign Envelope ID: 0D07E300-8D97-4F8F-B68E-24E372B6839E Item: 14
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effect or hereinafter enacted.

3.6.19 Labor Certification. By its signature hereunder, Consultant certifies that it is aware of the provisions of Section 3700 of the California Labor Code which require every employer to be insured against liability for Worker's Compensation or to undertake self-insurance in accordance with the provisions of that Code, and agrees to comply with such provisions before commencing the performance of the Services.

3.6.20 Authority to Enter Agreement. Consultant has all requisite power and authority to conduct its business and to execute, deliver, and perform the Agreement. Each Party warrants that the individuals who have signed this Agreement have the legal power, right, and authority to make this Agreement and bind each respective Party.

3.6.21 Counterparts. This Agreement may be signed in counterparts, each of which shall constitute an original.

3.6.22 Consultant Owners. Consultant and certain owners of Consultant are licensed by the California State Board of Accountancy. However, Consultant has owners not licensed by the California State Board of Accountancy who may provide services under this Agreement.

3.7 Subcontracting.

3.7.1 Prior Approval Required. Consultant shall not subcontract any portion of the work required by this Agreement, except as expressly stated herein, without prior written approval of City. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement.

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CITY OF LAKE FOREST CLIFTONLARDONALLEN LLP

By:

[AUTHORIZED CITY SIGNATURE]

By:

[VENDOR SIGNATURE 1]
Doug Cirbo
Mayor

Kassie Radermacher, CPA, CFE
Principal
ATTEST:

By:

[CITY CLERK SIGNATURE]

Lisa Berglund
City Clerk

APPROVED AS TO FORM:

By:

[CITY ATTORNEY SIGNATURE]

Best Best & Krieger LLP
City Attorney

[CONTRACT ADMINISTRATOR APPROVAL]
[PROJECT MANAGER APPROVAL]
[CITY CLERK - INSURANCE APPROVAL]

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Exhibit “A”-1

EXHIBIT "A"

SCOPE OF SERVICES
The Annual Comprehensive Financial Report (Annual Financial Report) shall be prepared by the independent auditors for the fiscal year ended June 30, 2023 and each of the subsequent years of the audit firm’s contract with the City. As it has done in the past, the City is planning on submitting the Annual Financial Report to the Government Finance Officers Association (GFOA) for consideration of their Certificate of Achievement in Financial Reporting program. Additional audits and financial statements are outlined below.

The independent auditor will be required to perform the following:

1. City Financial Statement Audit

The audit firm will perform an audit of all funds of the City. The audits are to be performed in accordance with generally accepted auditing standards, the standards set forth for financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the provisions of the Single Audit Act of 1984, as amended in 1996, and Title 2 of the Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) as well as any other applicable federal, state, local or programmatic audit requirements. The City’s Annual Comprehensive Financial Report (Annual Financial Report) will be prepared, and word processed by the audit firm and assembled in PDF. The independent auditor will render their opinion on the fair presentation of the City’s financial statements in conformity with generally accepted accounting pr inciples and shall provide one electronic and one photo-ready physical copy of the report.

2. Lake Forest Housing Authority Audit

The audit firm will perform an audit of the Lake Forest Housing Authority. The audits are to be performed in accordance with the auditing standards outlined in Section 1 above. The Lake Forest Housing Authority Financial Statements will be prepared, and word processed by the audit firm and assembled in PDF. The independent auditor will render their o pinion on the fair presentation of the financial statements in conformity with generally accepted accounting principles and shall provide six (6) printed and bound copies.

3. Air Quality Improvement Special Revenue Fund Audit

The audit firm will perform an audit of the Air Quality Improvement Special Revenue Fund. The audits are to be performed in accordance with the auditing standards outlined in Section 1 above. The Air Quality Improvement Special Revenue Fund Financial Statements will be prepared, and word processed by the audit firm and assembled in PDF. The independent auditor will render their opinion on the fair presentation of the financial statements in conformity with generally accepted accounting principles and shall provide three (3) printed and bound copies. The audit firm shall provide required communications associated with the Southern California Air Quality Management District rules.

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Exhibit “A”-2

4. Single Audit of Federally Assisted Grant Programs

If required, the audit firm will perform a single audit on the expenditures of federally assisted grant programs in accordance with the provisions of the Single Audit Act of 1984, as amended in 1996, and Title 2 of the Code of Federal Regulations Part 200 , Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). In addition to the audit of the federal awards, the independent auditor will review any materials included in the reporting package accompanying the data collection form. The City will prepare the Schedule of Expenditures of the Federal Awards. The Single Audit Report will be prepared, and word processed by the audit firm and assembled in PDF. The independent auditors will complete the data collection form and required filing and shall provide six (6) printed and bound copies.

5. Appropriation Limit Agreed-Upon-Procedure

The audit firm will perform agreed-upon procedures relative to the City’s calculation of its Appropriation Limit in accordance with the Article XIIIB Appropriations Limit Uniform Guidelines and as mandated by the California Constitution and shall render a letter annually to the City regarding compliance.

6. Required Communications

The audit firm will provide the required communications with those charged with governance pursuant to Statements on Auditing Standards.

7. Financial Statement Preparation

The audit firm is required to prepare the financial statements including drafting of note disclosures from available information provided by the City. The audit firm is responsible for preparation of the GASB 34 conversion accounting journal entries and reconciliations.

The audit firm is required to prepare GASB 34 conversion accounting journal entries to record the City’s net pension liability/asset and related deferred inflows and outflows and net OPEB liability/asset and related deferred inflows and outflows is required.

The audit firm is expected to prepare GASB 34 conversion accounting journal entries to record activities related to leases and subscription -based information technology agreements.

The City shall provide the Management Discussion and Analysis, Sta tistical Section, Fund Balance and Net Position classifications after issuance of the first draft of the financial statements.

8. Government Finance Officers Association Certificate of Achievement Award for Excellence in Financial Reporting (GFOA Award Program)

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Exhibit “A”-3

The City shall be responsible for meeting the requirements of the GFOA Award Program. The City shall prepare the application for the GFOA Award and written responses to prior year comments. The audit firm is expected to assist the City, as necessary, to meet the requirements of the GFOA Award Program which may include research and guidance on responding to prior year comments and interpretation of the GFOA Award Program requirements.

9. Meeting Attendance

The Engagement Partner may be expected to present at the City Council meetings when the contract is being awarded or amended.

The Engagement Partner and audit team members may be expected to present at the City Council Audit Committee Meeting. Presentat ions may be required during the planning phase of the audit , during the audit and at the conclusion to communicate audit results.

10. Schedule of Fieldwork

Generally, interim audit fieldwork is expected to take place in July of each year. Final fieldwork is expected to commence the first week of October. Draft financial reports are expected the first week of November. Issuance of Final Reports is expected the first week of December.

Upon receiving a Notice to Proceed from the City each year, the audit firm shall contact the Director of Finance to schedule an audit planning meeting. The auditors shall provide a preliminary detailed audit plan including a schedule for interim audit fieldwork dates, interim fieldwork and final fieldworks listing of schedules requested of the City and related supporting documentation, audit impacts of implementing new accounting standards, impacts of any changes in auditing standards, impacts of any change s in the audit firms interpretation of generally accepted accounting principles or audit methodology and dates of issuance of draft and final reports, etc., prior to starting interim audit fieldwork.

At the conclusion of interim fieldwork, a progress mee ting is expected to review preliminary audit results and pending items and changes to the detailed audit plan.

The audit firm will provide the City by mid -August each year with a final detailed audit plan and a list of all schedules to be prepared by the City.

A progress meeting is expected two weeks prior to commencement of final audit fieldwork to review status of the detailed audit plan. Some flexibility in the timing of final fieldwork is expected as the readiness of the City and audit firm is not ful ly predictable.

At the conclusion of final fieldwork a progress meeting is expected to review audit results and pending items.

The Engagement Partner is expected to lead the audit planning meeting and all progress meetings.

DocuSign Envelope ID: 0D07E300-8D97-4F8F-B68E-24E372B6839E Item: 14
611

(BB&K 2019)
55136.00200\31918793.1
Exhibit “A”-4

The City expects the City Financial Statement Audit, Lake Forest Housing Authority Audit, Air Quality Improvement Special Revenue Fund Audit and the Single Audit of Federally Assisted Grant Programs to occur on the same schedule and have the same issuance date. Inclusion of Single Audit fieldwork during the interim fieldwork or after but prior to final fieldwork is desirable.

11. Working Paper Retention and Access to Working Papers All working papers and reports must be retained, at the independent auditor's expense, for a minimum of five (5) years, unless the firm is notified in writing by the City of the need to extend the retention period. Pursuant to authority given by law, regulation or professional standards independent auditor may be requested to make certain workpapers and files available to a regulator for its regulatory oversight purposes.

Independent auditor shall notify the City of any such request, if permitted by law.

Access to the requested workpapers and files will be provided to the regulator under the supervision of independent auditor firm personnel and at a location designated by the firm. Furthermore, upon request, firm may provide copies of selected workpapers and files to such regulator. The regulator may intend, or decide, to distribute the copies or information contained therein to others, including other governmental agencies. In addition, the firm shall respond to the reasonable inquiries of successor independent auditors and allow successor independent auditors to review working papers relating to matters of continuing accounting significance, Firm will cooperate as required by professional standards. Firm will grant access to workpapers provided services have been paid and there is not threatened or actual litigation.

12. State and National Developments
It is expected that the selected firm will keep the City informed of new state and national developments affecting municipal finance and reporting, standards and trends including changes in federal/state gr ant program accounting and reporting requirements. This shall include at least one formal updating session per year with finance staff.

13. Optional Services – Annually determined at the request of the City The auditor firm may complete the City’s annual Street Report and electronically file it with the State Controller’s Office no later than the statutory submission deadline of each year.

The audit firm may complete the annual Cities Financial Transactions Report and electronically file it with the State Controller’s Office no later than the statutory submission deadline of each year.

The audit firm may complete the Rancho Cañada Financing Authority annual Special District’s Financial Transactions Report and electronically file it with the State Controller’s Office no later than the statutory submission deadline each year.

DocuSign Envelope ID: 0D07E300-8D97-4F8F-B68E-24E372B6839E Item: 14
612

(BB&K 2019)
55136.00200\31918793.1
Exhibit “B”-1

EXHIBIT "B"

SCHEDULE OF SERVICES

Consultant shall perform the work as described in the above references Exhibit “A” Scope of Services and at the direction of the City.

DocuSign Envelope ID: 0D07E300-8D97-4F8F-B68E-24E372B6839E Item: 14
613

(BB&K 2019)
55136.00200\31918793.1
Exhibit “C”-1

EXHIBIT "C"

COMPENSATION
Consultant shall be paid for services rendered in accordance with Section 3.3 of the Agreement, as described in Exhibit “A” Scope of Services, and the not-to exceed amount of two hundred thirty- three thousand sixty dollars ($233,060.00) and based on the following schedule:

Initial Term
Optional Years
(Subject to Amendments exercising
optional one-year extensions per
Section 3.1.2 of the Agreement)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
FY 2022-23
Audit
FY 2023-24
Audit
FY 2024-25
Audit
FY 2025-26
Audit
FY 2026-27
Audit
FY 2027-28
Audit
Fixed Audit Fee For Core
Services
City Audit of Basic Financial
Statements, including draft
ACFR
$39,200.00 $40,770.00 $42,400.00 $44,100.00 $45,860.00 $47,690.00 Lake Forest Housing Authority
Audit $4,040.00 $4,200.00 $4,370.00 $4,540.00 $4,720.00 $4,910.00 SCAQMD Revenue Fund Audit $1,820.00 $1,890.00 $1,970.00 $2,050.00 $2,130.00 $2,220.00 Single Audit (One Major
Program) $6,560.00 $6,820.00 $7,090.00 $7,370.00 $7,660.00 $7,970.00 GANN Limit $640.00 $670.00 $700.00 $730.00 $760.00 $790.00 One-Time Fee - Account
Conversion $2,500.00 $0.00 $0.00 $0.00 $0.00 $0.00
One-Time Fee - Internal
Control Revisions $0.00 $2,500.00 $0.00 $0.00 $0.00 $0.00 Tech Fee - One-Time Services $125.00 $125.00 $0.00 $0.00 $0.00 $0.00 Tech Fee $2,610.00 $2,710.00 $2,820.00 $2,930.00 $3,050.00 $3,170.00 Sub Total $57,495.00 $59,685.00 $59,350.00 $61,720.00 $64,180.00 $66,750.00 Fixed Fee for Additional
Required Major Program
Single Audit

Price for One Additional Major
Program $4,500.00 $4,680.00 $4,870.00 $5,060.00 $5,260.00 $5,470.00 Total Annual Compensation -
Fixed Audit Fee $61,995.00 $64,365.00 $64,220.00 $66,780.00 $69,440.00 $72,220.00 Optional Services
City's Annual Street Report $1,740.00 $1,810.00 $1,880.00 $1,960.00 $2,040.00 $2,120.00 City's Annual Financial
Transaction Report $4,920.00 $5,120.00 $5,320.00 $5,530.00 $5,750.00 $5,980.00 DocuSign Envelope ID: 0D07E300-8D97-4F8F-B68E-24E372B6839E Item: 14
614

55136.00200\31918793.1

Initial Term
Optional Years
(Subject to Amendments exercising
optional one-year extensions per
Section 3.1.2 of the Agreement)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
FY 2022-23
Audit
FY 2023-24
Audit
FY 2024-25
Audit
FY 2025-26
Audit
FY 2026-27
Audit
FY 2027-28
Audit
One-Time Account Conversion
for City SCO $2,000.00 $0.00 $0.00 $0.00 $0.00 $0.00
Rancho Cañada Financing
Authority Annual Financial
Transactions Report
$1,080.00 $1,120.00 $1,160.00 $1,210.00 $1,260.00 $1,310.00 Tech Fee - One-Time Services $100.00 $0.00 $0.00 $0.00 $0.00 $0.00 Tech Fee $390.00 $410.00 $430.00 $450.00 $470.00 $490.00 Sub Total $10,230.00 $8,460.00 $8,790.00 $9,150.00 $9,520.00 $9,900.00 Additional Services
Annual Amount for Additional
Services $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 Total Annual Compensation -
All Fixed Fee, Optional, and
Additional Services
$77,225.00 $77,825.00 $78,010.00 $80,930.00 $83,960.00 $87,120.00 Total Compensation Original
Agreement (Years 1-3) $233,060.00

Additional Services

Compensation for additional services shall not exceed $5,000 annually and shall be billed using the following rates:

Initial Term
Optional Years
(Subject to Amendments exercising
optional one-year extensions per
Section 3.1.2 of the Agreement)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Hourly Rates for
Additional
Services
FY 2022-23
Audit
FY 2023-24
Audit
FY 2024-25
Audit
FY 2025-26
Audit
FY 2026-27
Audit
FY 2027-28
Audit
Principal $420.00 $440.00 $460.00 $480.00 $500.00 $520.00 Director/Manager $260.00 $270.00 $280.00 $290.00 $300.00 $310.00 Senior $160.00 $170.00 $180.00 $190.00 $200.00 $210.00
Associate $110.00 $115.00 $120.00 $125.00 $130.00 $135.00 DocuSign Envelope ID: 0D07E300-8D97-4F8F-B68E-24E372B6839E Item: 14
615

(BB&K 2019)
55136.00200\31918793.1
Exhibit “D”-1

EXHIBIT “D”

INSURANCE REQUIREMENTS

3.2.11 Insurance.

3.2.11.1 Time for Compliance . Consultant shall not commence work under this Agreement until it has provided evidence satisfactory to the City that it has secured all insurance required under this section. In addition, Consultant shall not allow any subconsultant to commence work on any subcontract until it has provided evidence satisfactory to the City that the subconsultant has secured all insurance required under this section.

3.2.11.2 Types of Insurance Required . As a condition precedent to the effectiveness of this Agreement for work to be performed hereunder, and without limiting the indemnity provisions of the Agreement, the Consultant, in partial performance of its obligations under such Agreement, shall procure and maintain in full force and effect during the term of the Agreement the following policies of insurance. If the existing policies do not meet the insurance requirements set forth herein, Consultant agrees to amend, supplement or endorse the policies to do so.
(A) Commercial General Liability: Commercial General Liability Insurance which affords coverage at least as broad as Insurance Services Office "occurrence" form CG 0001, or the exact equivalent, with limits of not less than $1,000,000 per occurrence and no less than $2,000,000 in the general aggregate. Defense costs shall be paid in addition to the limits. The policy shall contain no endorsements or provisions (1) limiting coverage for contractual liability; (2) excluding coverage for claims or suits by one insured against another (cross-liability); or (3) containing any other exclusion(s) contrary to the terms or purposes of this Agreement. (B) Automobile Liability Insurance: Automobile Liability Insurance with coverage at least as broad as Insurance Services Office Form CA 0001 covering "Any Auto" (Symbol 1), or the exact equivalent, covering bodily injury and property damage for all activities with limits of not less than $1,000,000 combined limit for each occurrence. If Consultant does not own any company vehicles or may not be able to purchase a Business Automobile Insurance Policy, the requirement may be satisfied by providing either of the following: (1) a Personal Automobile Liability policy for the Consultant's own vehicle stipulating "Automobile Liability Insurance with a limit of not less than $1,000,000 each accident"; or (2 ) a non -owned auto endorsement to the Commercial General Liability policy if Consultant uses vehicles of others (e.g., vehicles of employees).
(C) Workers' Compensation: Workers' Compensation
Insurance, as required by the State of California and Employer's Liability Insurance with a limit of not less than $1,000,000 per accident for bodily injury and disease. (D) Professional Liability (Errors & Omissions): Professional Liability insurance or Errors & Omissions insurance appropriate to Consultant’s profession w ith limits of not less than $1,000,000 per claim. Covered professional services shall specifically include all work to be performed under the Agreement and delete any exclusions that may potentially affect the work to be performed (for example, any exclusions relating to lead, asbestos, pollution, testing, underground storage tanks, laboratory analysis, soil work, etc.). If coverage is written on a claims-made basis, the retroactive date shall precede the effective date of the initial DocuSign Envelope ID: 0D07E300-8D97-4F8F-B68E-24E372B6839E Item: 14
616

(BB&K 2019)
55136.00200\31918793.1
Exhibit “D”-2

Agreement and continuous coverage will be maintained or an extended reporting period will be exercised for a period of at least three (3) years from termination or expiration of this Agreement.

3.2.11.3 Insurance Endorsements . Required insurance policies shall contain the following provisions, or Consultant shall provide endorsements on forms approved by the City to add the following provisions to the insurance policies:
(A) Commercial General Liability:
(1) Additional Insured: The City, its officials, officers, employees, agents, and volunteers shall be additional insureds with regard to liability and defense of suits or claims arising out of the performance of the Agreement.

Additional Insured Endorsements shall not (1) be
restricted to "ongoing operations"; (2) exclude "contractual liability"; (3) restrict coverage to "sole" liability of Consultant; or (4) contain any other exclusions contrary to the terms or purposes of this Agreement. For all policies of Commercial General Liability insurance, Consultant shall provide endorsements in the form of ISO CG 20 10 10 01 and 20 37 10 01 (o r endorsements providing the exact same coverage) to effectuate this requirement. (2) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium. (B) Automobile Liability:
(C) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium.

3.2.11.4 Professional Liability (Errors & Omissions):
(A) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancella tion has been served upon the City except ten (10) days shall be allowed for non-payment of premium. (B) Contractual Liability Exclusion Deleted: This insurance shall include contractual liability applicable to this Agreement. The policy must “pay on behalf of” the insured and include a provision establishing the insurer’s duty to defend.

3.2.11.5 Workers' Compensation:
(A) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has be en served upon the City except ten (10) days shall be allowed for non-payment of premium. (B) Waiver of Subrogation: A waiver of subrogation stating that the insurer waives all rights of subrogation against the City, its officials, officers, employees, agents, and volunteers.

DocuSign Envelope ID: 0D07E300-8D97-4F8F-B68E-24E372B6839E Item: 14
617

(BB&K 2019)
55136.00200\31918793.1
Exhibit “D”-3

3.2.11.6 Primary and Non -Contributing Insurance . All policies of Commercial General Liability and Automobile Liability insurance shall be primary and any other insurance, deductible, or self-insurance maintained by the City, its officials, officers, employees, agents, or volunteers shall not contribute with this primary insurance. Policies shall contain or be endorsed to contain such provisions.

3.2.11.7 Waiver of Subrogation . All policies of Commercial General Liability and Automobile Liability insuranc e shall contain or be endorsed to waive subrogation against the City, its officials, officers, employees, agents, and volunteers or shall specifically allow Consultant or others providing insurance evidence in compliance with these specifications to waive their right of recovery prior to a loss. Consultant hereby waives its own right of recovery against the City, its officials, officers, employees, agents, and volunteers, and shall require similar written express waivers and insurance clauses from each of its subconsultants.

3.2.11.8 Deductibles and Self-Insured Retentions. Any deductible or self- insured retention must be approved in writing by the City and shall protect the City, its officials, officers, employees, agents, and volunteers in the same manner and to the same extent as they would have been protected had the policy or policies not contained a deductible or self -insured retention.

3.2.11.9 Evidence of Insurance . The Consultant, concurrently with the execution of the Agreement, and as a condition precedent to the effectiveness thereof, shall deliver either certified copies of the required policies, or original certificates on forms approved by the City, together with all endorsements affecting each policy. Required insurance policies shall not be in compliance if they include any limiting provision or endorsement that has not been submitted to the City for approval. The certificates and endorsements for each insurance policy shall be signed by a person authorized by that insurer to bind coverage on its behalf. At least fifteen (15 days) prior to the expiration of any such policy, evidence of insurance showing that such insurance coverage has been renewed or extended shall be filed with the City. If such coverage is cancelled or reduced and not replaced immediatel y so as to avoid a lapse in the required coverage, Consultant shall, within ten (10) days after receipt of written notice of such cancellation or reduction of coverage, file with the City evidence of insurance showing that the required insurance has been reinstated or has been provided through another insurance company or companies.

3.2.11.10 Failure to Maintain Coverage . In the event any policy of insurance required under this Agreement does not comply with these specifications or is canceled and not replaced immediately so as to avoid a lapse in the required coverage, City has the right but not the duty to obtain the insurance it deems necessary and any premium paid by City will be promptly reimbursed by Consultant or City will withhold amounts sufficient to pay pr emium from Consultant payments. In the alternative, City may cancel this Agreement effective upon notice.

3.2.11.11 Acceptability of Insurers . Each such policy shall be from a company or companies with a current A.M. Best's rating of no less than A:VII and authoriz ed to transact business of insurance in the State of California, or otherwise allowed to place insurance through surplus line brokers under applicable provisions of the California Insurance Code or any federal law.

3.2.11.12 Enforcement of Agreement Provisions (non estoppel).

Consultant acknowledges and agrees that actual or alleged failure on the part of the City to inform DocuSign Envelope ID: 0D07E300-8D97-4F8F-B68E-24E372B6839E Item: 14
618

(BB&K 2019)
55136.00200\31918793.1
Exhibit “D”-4

Consultant of non-compliance with any requirement imposes no additional obligation on the City nor does it waive any rights hereunder.

3.2.11.13 Requirements Not Limiting . Requirement of specific coverage or minimum limits contained in this Appendix are not intended as a limitation on coverage, limits, or other requirement, or a waiver of any coverage normally provided by any insurance.

3.2.11.14 Insurance for Subconsultants. Not applicable.

DocuSign Envelope ID: 0D07E300-8D97-4F8F-B68E-24E372B6839E Item: 14
619

Attachment 3
Item: 14
620

Reference Check for CliftonLarsonAllen LLP (CLA)
Financial Audit Consulting Services
1 of 1

Contact 1
City of Burbank, CA
Contact 3
City of Westminster, CA
Contact 4
City of La Canada Flintridge, CA
# Questions Response Response Response

1 What were the services performed?
In charge of City audit, SCAQMD audit,
Single audit, GANN agreed-upon-
procedures, Water and Electric audit,
and REAC filling
In charge City audit, SCAQMD audit,
single audit, GANN agreed-upon-
procedures and preparing State
Controllers Report
In charge of City Audit, Single Audit,
GANN agreed-upon-procedures, special
district annual financial transactions
reports, and preparing the City’s Annual
Comprehensive Financial Report
(ACFR)

2 How would you rate the quality of work? Scale
1‐5: 1 Poor, 2 Ok, 3 Good, 4 Very Good, 5
Excellent

4 – Very good

5 – Excellent

5-Excellent

3 Were there any delays or deviations from the firms'
workplan? If so, what caused them?

No delays or deviations

No delays or deviations from work plan

No delays or deviations
4 Did the firm meet all deadlines? Yes Yes Yes

5 Was regular communication satisfactory?
Yes Yes, communication is excellent Yes

6 How would you rate the firm’s approach and
performance when communicating with City Council,
Audit Committee, and Investment Committee? Scale
1‐5: 1 Poor, 2 Ok, 3 Good, 4 Very Good, 5 Excellent
5 – Excellent job in communicating
with staff
5 – Excellent job in communicating with
City Council
5 – Excellent job in communicating with
City Council and City Manager.

7 Would you consider using this firm for future
projects/services?
No, City needs go out to RFP for Audit
Consulting Services
Yes, would use CliftonLarsonAllen
(CLA) for future projects
Yes

8 Do you have any additional comments or information
regarding your experience with the firm?
No additional comments No additional comments No additional comments

Item: 14
621

55136.00400\41318319.2

CITY COUNCIL AGENDA REPORT
MEETING DATE: 6/6/2023
DEPARTMENT: Community Development
SUBJECT:

CITY-INITIATED ORDINANCES TO AMEND TITLES 5 AND 9 OF THE LAKE

FOREST MUNICIPAL CODE TO ADDRESS LOW BARRIER NAVIGATION

CENTERS, TRANSITIONAL AND SUPPORTIVE HOUSING, STREAMLINED

REVIEW OF ELIGIBLE PROJECTS, EMPLOYEE HOUSING, EMERGENCY

SHELTER PARKING, AND RESIDENTIAL CARE FACILITIES AND FINDING

THE ACTIONS TO BE EXEMPT FROM CEQA UNDER STATE CEQA
GUIDELINES SECTIONS 15060(C)(1) AND 15061(B)(3)
RECOMMENDED ACTION(S):
1) Introduce Ordinance No. ____ entitled: AN ORDINANCE OF THE CITY

COUNCIL OF THE CITY OF LAKE FOREST, CALIFORNIA, AMENDING TITLE 9 OF THE LAKE FOREST MUNICIPAL CODE TO ADDRESS LOW

BARRIER NAVIGATION CENTERS, TRANSITIONAL AND SUPPORTIVE

HOUSING, STREAMLINED REVIEW OF ELIGIBLE PROJECTS,

EMPLOYEE HOUSING, EMERGENCY SHELTER PARKING, AND

RESIDENTIAL CARE FACILITIES AND FINDING THE ACTION TO BE

EXEMPT FROM CEQA UNDER STATE CEQA GUIDELINES SECTIONS
15060(c)(1) AND 15061(b)(3)
2) Introduce Ordinance No. _____ entitled: AN ORDINANCE OF THE CITY

COUNCIL OF THE CITY OF LAKE FOREST, CALIFORNIA, ADDING
CHAPTER 5.44 TO THE LAKE FOREST MUNICIPAL CODE

REGARDING RESIDENTIAL CARE FACILITIES AND FINDING THE

ACTION TO BE EXEMPT FROM CEQA UNDER STATE CEQA
GUIDELINES SECTIONS 15060(c)(1) AND 15061(b)(3)
EXECUTIVE SUMMARY:

This item consists of two ordinances (Attachments 1 and 2) that amend Lake Forest Municipal Code (“LFMC” or “Code”) Titles 5 and 9 to address low barrier navigation centers, transitional and supportive housing, streamlined review for eligible projects, employee housing, emergency shelter parking, and residential care facilities. These Code amendments are contemplated by the City’s Sixth Cycle Housing Element (2021-2029), specifically Housing Element Program 7 (Zoning Code Amendments- Housing Constraints). Collectively, they respond to the California Department of Housing and Community Development’s (HCD) Item: 15
622

55136.00400\41318319.2 -2-
2 6
5 0
request that the City remove certain constraints on housing development and ensure that the City’s standards and permitting requirements are consistent with state law. On May 4, 2023, the Planning Commission reviewed and recommended approval of the Zoning Code (Title 9) amendments (ZC 04-23- 5616) (Attachment 3). Attachment 4 contains strike-through and underline text to identify the specific changes that would be made if both ordinances are approved. These changes are proposed to ensure the City remains in conformance with Program 7 of the City’s Housing Element (Attachment 5).

BACKGROUND:

The Housing Element is a section of the City’s General Plan that addresses housing needs and conditions within Lake Forest. It identifies goals, policies, and programs that the City uses to guide actions related to housing. The City submitted a draft 2021–2029 (6th Cycle) Housing Element to HCD in September 2021, prior to the statutory October 15, 2021, deadline. HCD provided comments in late November. The City Council took HCD’s comments into account and adopted a revised Housing Element on August 16, 2022. HCD had more comments, so the Housing Element was updated again and re-adopted by the City Council on January 3, 2023. HCD sent the City a letter certifying the 2021- 2029 Housing Element on February 24, 2023 (Attachment 6).

The adopted and certified Housing Element includes Housing Program 7 (Attachment 5) which requires the City to update the Zoning Code to remove constraints to housing development and ensure that the City’s standards and permitting requirements are consistent with state law. All the Code amendments in this housing program were required by state law or HCD (as a condition for certification). Table 1 includes the comprehensive list of Housing Program 7’s Code amendments. Some amendments have been completed already and the rest are included in these ordinances.

Table 1: Housing Element Program 7 Zoning Code Amendments Zoning Code
Amendment
Brief Description Status
A. Mixed-use
Standards
Amend Code to add mixed-use zones
and corresponding development
standards consistent with mixed-use
designations in the General Plan.

Adopted
B. Low Barrier
Navigation Centers
Amend Code to define and permit low
barrier navigation centers per
Government Code sections 65660–
65668.

Pending CC
Approval
Item: 15
623

55136.00400\41318319.2 -3-
2 6
5 0
Zoning Code
Amendment
Brief Description Status
C. Transitional and
Supportive Housing
Amend Code to ensure that
transitional and supportive housing
are allowed in residential and mixed-
uses zones per Government Code
section 65583(c)(3), and that
supportive housing is permitted in
multifamily zones, including mixed-
use zones, in accordance with
Government Code sections 65650–
65656.

Pending CC
Approval
D. Employee
Housing and
Agricultural Worker
Housing
Amend Code to ensure that employee
housing regulations comply with
Health and Safety Code sections
17021.5–17021.8, including but not
limited to, changing the term
“agricultural working housing” to
“employee housing.”
Pending CC
Approval
E. Streamlined
and Ministerial
review for Eligible
Affordable Housing
Projects
Amend Code to ensure that eligible
multi-family projects with an
affordable component are provided
streamlined review and are subject
only to objective design standards,
consistent with SB 35 and SB 330.

Pending CC
Approval
F. Emergency
Shelter Parking
Amend Code to regulate parking
standard for emergency shelters in
compliance with AB 139.

Pending CC
Approval
G. Residential
Care Facilities
Amend Code to update permit
procedures to allow residential care
facilities of seven or more persons in
all residential zones with objective
standards to promote approval
certainty and consistency with state
and federal laws.

Pending CC
Approval
H. Reasonable
Accommodation
Amend Code to ensure that
reasonable accommodation
procedures and findings are
consistent with state and federal laws.

Adopted
Housing Program 7 commits the City to adopt the above code amendments by June of 2023.

Item: 15
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55136.00400\41318319.2 -4-
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DISCUSSION:

In accordance with Housing Program 7 and State law, staff has prepared two ordinances that address the following:

1. Low Barrier Navigation Centers

2. Transitional and Supportive Housing

3. Employee Housing and Agricultural Worker Housing

4. Streamlined and Ministerial review for Eligible Affordable Housing Projects

5. Emergency Shelter Parking

6. Residential Care Facilities
The first proposed ordinance is a Zoning Code amendment (“ZC 04-23-5616”) (Attachment 1) and the second ordinance proposes a new Chapter 5.44 in Title 5 (“Chapter 5.44 Ordinance”) (Attachment 2). The following is a discussion of these proposed ordinances and related State laws. In addition, staff has provided Attachment 4, which shows the proposed Code amendments (with strike-through deletions and underlined additions) for each use.

1. Low Barrier Navigation Centers
In 2019, the Governor signed into law Assembly Bill 101. Among other things, AB 101 requires cities to permit specified “Low Barrier Navigation Centers” (“LBNCs”) by right in areas zoned for mixed use and non-residential zones where multifamily uses are allowed. State law defines an LBNC as the following:

A Housing First, low-barrier, service-enriched shelter
focused on moving people into permanent housing that
provides temporary living facilities while case managers connect individuals experiencing homelessness to income, public benefits, health services, shelter, and housing. “Low Barrier” means best practices to reduce barriers to entry, and may include, but is not limited to, the following:
(1) The presence of partners if it is not a population-specific site, such as for survivors of domestic violence or sexual assault, women, or youth.
(2) Pets.
(3) The storage of possessions.
(4) Privacy, such as partitions around beds in a dormitory setting or in larger rooms containing more than two
beds, or private rooms.” (Government Code section
65660(a)).

Item: 15
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55136.00400\41318319.2 -5-
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ZC 04-23-5616 includes a new definition (consistent with state law), a new line in the “Mixed-Use Land Use Matrix,” and a new LBNC Zoning Code section (9.146.170). The new Zoning Code section requires approval of a new streamlined administrative permit for construction or operation of an LBNC. The new section also includes objective operational and development standards, such as: proximity to another LBNC, operational services, on-site personnel, maximum number of beds, parking, intake areas, lighting, and security. The LBNC ordinance will sunset (i.e., expire) when the state statute does, which at this time is scheduled for January 1, 2027.

2. Transitional and Supportive Housing
In 2013, the City adopted Ordinance No. 252, which addressed transitional and supportive housing in compliance with then-current state law. Housing Element Program 7 requires the City to revise the Zoning Code to ensure that transitional and supportive housing are allowed in accordance with current law. Accordingly, ZC 04-23-5616 updates the Zoning Code’s definitions of transitional and supportive housing to read as follows:
“Supportive Housing: As defined by California Government Code section 65650(a), “housing with no limit on length of stay, that is occupied by the target population, and that is linked to onsite or offsite services that assist the supportive housing resident in retaining the housing, improving their health status, and maximizing their ability to live and, when possible, work in the community.” Should this Code’s Supportive Housing definition conflict with the California Government Code definition of this term, the Government Code definition prevails.

Transitional Housing: As defined by California Government Code section 65582(j), “buildings configured as rental housing developments, but operated under program requirements that require the termination of assistance and recirculating of the assisted unit to another eligible program recipient at a predetermined future point in time that shall be no less than six months from the beginning of the assistance.” Should this Code’s Transitional Housing definition conflict with the California Government Code definition of this term, the Government Code definition prevails.”
ZC 04-23-5616 also creates a new Zoning Code section (9.170.180), which includes the following:
•In accordance with Government Code section 65583(c)(3), transitional and supportive housing are considered residential uses and subject to those restrictions that apply to other residential dwellings of the same type and in the same zone.

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•Supportive housing that complies with the requirements of Government Code section 65650 et seq. is considered a use by right in all zones where multifamily uses are permitted, including mixed-use zones. In accordance with Government Code section 65651(b)(1), a supportive-housing development in these areas must comply with all objective development standards and policies that apply to other multifamily developments within the same zone.

3. Employee Housing and Agricultural Worker Housing
Based on previous state laws, the Code currently has “Agricultural Employee Quarters Housing” and “Quarters for Employee Temporary Use” in the definitions section and in the non-residential and mixed-use land use matrices. Based on comments from HCD (that were incorporated into Housing Program 7), ZC 04- 23-5616 replaces these terms with “Employee Housing” and creates a new definition that simply refers to the definition in State law. Generally, employee housing is privately-owned housing that houses five or more employees and meets specified criteria in state law (e.g., the living quarters are provided in connection with employment).

California Health and Safety Codes sections 17021.5 to 17021.8 preempt local regulation of employee housing that meets specific criteria. In accordance with these state laws, ZC 04-23-5616 creates a new Zoning Code section (9.146.190) that includes the following provisions:
•All employee housing with a permit from the statutory enforcement agency (defined below) and that serves six or fewer employees is considered a single-family residence;
•No use permit, site development permit, variance, or other zoning clearance is required for employee housing that serves six or fewer employees unless the same is required for a dwelling of the same type in the same zone.
•The “statutory enforcement agency” refers to the Department of Housing and Community Development (HCD) unless and until the City or the County of Orange assume responsibility for enforcing the Employee Housing Act.

ZC 04-23-5616 also amends section 9.72.090’s non-residential land use matrix to clarify that in zones where employee housing is permitted (A1 and OS), such housing must comply with the applicable Health and Safety Code standards (see new Footnote 24).

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4. Streamlined and Ministerial Review for Eligible Affordable Housing Projects
On March 1, 2022, the City approved Ordinance No. 351 to establish objective design standards for new multifamily projects in the City. These standards are used to review multifamily projects that fall under a ministerial review subject to the requirements of state law, including Senate Bill 35 (“SB 35”). On August 16, 2022, the City Council approved Ordinance No. 356, which created mixed-use zoning districts that included their own specific objective design and development standards. ZC 04-23-5616 includes a new Zoning Code provision in section

9.73.101 (Mixed-use districts) that clarifies that projects qualifying for streamlined and ministerial processing under SB 35 are subject to the objective design and development standards in the mixed-use zoning regulations.

5. Emergency Shelter Parking
In 2013, the City adopted Ordinance No. 252, which addressed emergency shelters in compliance with then-current state laws. Among other things, that ordinance established a parking requirement of “One (1) space per three (3) beds.” In 2019, Assembly Bill 139 established that cities may only require emergency shelters to provide sufficient on-site parking to accommodate all staff working in the emergency shelter, provided that the standards do not require more parking for emergency shelters than other residential or commercial uses in the same zone. In accordance with AB 139, ZC 04-23-5616 updates the emergency-shelter parking requirement to a minimum of one space per employee in the largest shift.

6. Residential Care Facilities
A residential care facility provides accommodation and services to individuals in a residential setting. Examples include (among others) care for elderly or disabled individuals. In recent years, the State of California has imposed certain limits on local regulation of residential care facilities. Specifically, the City’s Zoning Code must treat residential care facilities with six or fewer residents as a single-family residential use. In accordance with State law and Housing Program 7, this Zoning Code amendment updates the City’s Zoning Code related to residential care facilities, including facilities serving 7 or more persons. The City currently does not have any regulations or licensing requirements for residential care facilities with more than seven persons. ZC 04-23-5616 and the Chapter

5.44 Ordinance include the following:
•Defines “residential care facility” to encompass the various types of residential care facilities (to eliminate redundancies) and deletes the Item: 15
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definitions for “community care facility” and “alcoholism or drug abuse recovery or treatment (“AOD”) facility.”
•Allows residential care facilities under the new streamlined licensing and objective operational standards in a new Chapter 5.44 of the LFMC.

Among other things, the operational standards include: a facility separation requirement, a limit of no more than two residents per bedroom, a requirement that an onsite manager reside full-time on the property, a City- approved management plan, and a City-approved emergency and security plan.

Planning Commission Review
The Planning Commission reviewed ZC 04-23-5616 at a public hearing on May 4, 2023. The Commission adopted a resolution recommending approval of ZC 04-23-5616 by the City Council (Attachment 3). Because amendments to Title 5 are outside the Planning Commission’s jurisdiction, it did not review the Chapter

5.44 Ordinance.

Conclusion
These City-initiated code amendments would amend Titles 5 and 9 of the LFMC to address low barrier navigation centers, transitional and supportive housing, streamlined review for eligible projects, employee housing, emergency shelter parking, and residential care facilities. These code amendments are contemplated by the City’s Housing Element Program 7 (Zoning Code Amendments- Housing Constraints). Collectively, the code amendments are aimed at removing constraints to housing development and ensuring the City’s standards and permitting requirements are consistent with State law.

ENVIRONMENTAL REVIEW:

This proposed action is not subject to the provisions of the California Environmental Quality Act (“CEQA”) pursuant to Section 15060(c)(1) of the State CEQA Guidelines, which provides that activity that does not involve the exercise of discretionary power by a public agency is not subject to CEQA. Here, the code amendments do not constitute a discretionary project subject to CEQA because they ensure that the City’s standards and permitting requirements are consistent with state law and fair housing laws, as required by HCD. The code amendments merely codify these requirements in the LFMC. Additionally, the code amendments are exempt from CEQA under Section 15061(b)(3) of the State CEQA Guidelines, which provides that a project is exempt from CEQA where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. Here, there is no possibility that the code amendments may have a significant effect on the environment because Item: 15
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they merely amend the LFMC to be consistent with state law and fair housing laws, which are already binding on the City.

PUBLIC NOTICING:

The City Council hearing to consider these ordinances was duly noticed in a newspaper of general circulation on May 25, 2023. On May 25, 2023, the public notice was also posted at City Hall. In addition, in accordance with LFMC section

9.196.020, on May 30, 2023, the City Clerk made the draft ordinances available for public inspection in the City Clerk’s office.

FISCAL IMPACT:

There is no fiscal impact related to the recommended actions. _________
ATTACHMENTS:

1. Draft ZC 04-23-5616 Ordinance

2. Draft Chapter 5.44 Ordinance

3. ZC 04-23-5616 PC Resolution (excluding Exhibit A)

4. Code Amendment Additions and Deletions by Subject

5. Housing Program 7 from Adopted Housing Element

6. HCD Certification Letter
Initiated By: Jennifer Mansur, AICP, Senior Planner
Submitted By: Gayle Ackerman, AICP, Director of Community Development Approved By: Debra Rose, City Manager
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Attachment 1
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ORDINANCE NO. _____

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
LAKE FOREST, CALIFORNIA, AMENDING TITLE 9 OF

THE LAKE FOREST MUNICIPAL CODE TO ADDRESS

LOW BARRIER NAVIGATION CENTERS, TRANSITIONAL

AND SUPPORTIVE HOUSING, STREAMLINED REVIEW

OF ELIGIBLE PROJECTS, EMPLOYEE HOUSING,

EMERGENCY SHELTER PARKING, AND RESIDENTIAL

CARE FACILITIES AND FINDING THE ACTION TO BE

EXEMPT FROM CEQA UNDER STATE CEQA
GUIDELINES SECTIONS 15060(c)(1) AND 15061(b)(3)
WHEREAS, the 2021–2029 (6th cycle) Lake Forest Housing Element (“Housing Element”) was approved by the City Council on January 6, 2023, and certified by the California Housing and Community Development Department (“HCD”) on February 24, 2023; and
WHEREAS, the Housing Element includes Housing Program 7: Zoning Code Amendments - Housing Constraints, which requires the City to update the Zoning Code to remove constraints to housing development and ensure that the City’s standards and permitting requirements are consistent with state law.

Specifically, Housing Program 7 requires code amendments related to low barrier navigation centers, transitional and supportive housing, employee housing, emergency shelter parking, and residential care facilities; and WHEREAS, the City initiated Zoning Code Amendment (“ZCA”) 04-23- 5616 to amend Title 9 of the Lake Forest Municipal Code to implement Housing Element Program 7 ; and
WHEREAS, on April 20, 2023, the City gave public notice of the Planning Commission public hearing for ZCA 04-23-5616 by publishing the required notice in a newspaper of general circulation and posting the notice at City Hall; and WHEREAS, in accordance with LFMC section 9.196.020, on April 24, 2023, the Director of Community Development made the draft ordinance (i.e., ZCA 04-23-5616) available for public inspection in the Department of Community Development offices and supplied it at cost to all persons desiring a copy; and WHEREAS, on May 4, 2023, the Planning Commission held a duly-noticed public hearing and considered the staff report, recommendations by staff, and public testimony concerning ZCA 04-23-5616 and adopted a resolution recommending that the City Council approve and adopt the ordinance; and Item: 15
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WHEREAS, on May 25, 2023 the City gave public notice of the City Council public hearing for ZCA 04-23-5616 by publishing the required notice in a newspaper of general circulation and posting the notice at City Hall; and WHEREAS, in accordance with LFMC section 9.196.020, on May 30, 2023 the City Clerk made the ordinance and all relevant documents available for public inspection in the City Clerk’s office, at least five days before the scheduled City Council public-hearing; and
WHEREAS, on June 6, 2023, the City Council held a noticed public hearing and considered the staff report, recommendations by staff, and public testimony concerning ZCA 04-23-5616; and
WHEREAS, all legal prerequisites to the adoption of this ordinance have occurred.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE
FOREST, CALIFORNIA DOES ORDAIN AS FOLLOWS:

SECTION 1. Incorporation of Recitals. The City Council hereby finds and determines that the Recitals above are true and correct and incorporated herein.

SECTION 2. CEQA. The City Council finds that Zoning Code Amendment 04-23-5616 (the Amendment) is not subject to the California Environmental Quality Act (“CEQA”) for several separate and independent reasons. First, approval of the Amendment is not subject to CEQA because it does not constitute a discretionary project subject to CEQA. This code amendment ensures that City’s standards and permitting requirements are consistent with state law and fair housing laws, as required by the California Department of Housing and Community Development (“HCD”). The amendment merely codifies these requirements in the City’s Zoning Code. (See State CEQA Guidelines, § 15060(c)(1) [activity that does not involve exercise of discretionary power by a public agency not subject to CEQA].) Second, approval of the amendment is exempt from CEQA under State CEQA Guidelines section 15061(b)(3), which exempts projects from CEQA where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. Here, there is no possibility that the amendment may have a significant effect on the environment because it merely amends the Zoning Code to be consistent with state laws and fair housing laws, as required by HCD, which are already binding on the City.

SECTION 3. General Plan. Based on the entire record before the City Item: 15
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Council, including all written and oral evidence presented, the City Council hereby finds and determines that ZCA 04-23-5616 is consistent with the City’s adopted General Plan because it implements Housing Element Housing Program 7, as certified by HCD law.

SECTION 4. Added Definitions to LFMC Section 9.04.030. The following definitions are hereby added to Section 9.04.030 (Definitions) of the Lake Forest Municipal Code to read as follows:
“Employee Housing: has the same meaning as in California Health and Safety Code Section 17008(a), as that section is amended from time to time.

Low-Barrier Navigation Center: As defined by California Government Code section 65660(a), “a Housing First, low-barrier, service- enriched shelter focused on moving people into permanent housing that provides temporary living facilities while case managers connect individuals experiencing homelessness to income, public benefits, health services, shelter, and housing. ‘Low barrier’ means best practices to reduce barriers to entry, and may include, but is not limited to, the following:
(1) The presence of partners if it is not a population-specific site, such as for survivors of domestic violence or sexual assault, women, or youth.
(2) Pets.
(3) The storage of possessions.
(4) Privacy, such as partitions around beds in a dormitory setting or in larger rooms containing more than two beds, or private rooms.”
Should this Code’s Low-Barrier Navigation Center definition conflict with Government Code section 65660(a), the Government Code definition prevails.

Residential Care Facility: An intermediate care
facility/developmentally disabled-habilitative or an intermediate care facility/developmentally disabled–nursing, as defined by California Health and Safety Code section 1250; a congregate living health facility, as defined by California Health and Safety Code section 1250; a community care facility, as defined by California Health and Safety Code section 1502; a residential care facility for the elderly, as defined by California Health and Safety Code section 1569.2; a residential care facility for persons with chronic life-threatening Item: 15
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illness, as defined by California Health and Safety Code section 1568.01; an alcoholism or drug abuse recovery or treatment facility, as defined by California Health and Safety Code section 11834.02; a pediatric day health and respite care facility, as defined by California Health and Safety Code section 1760.2; or a family care home, foster home, or group home serving persons with mental health disorders or other disabilities or dependent and neglected children under California Welfare and Institutions Code section 5116.

Target Population: As defined by California Health and Safety Code Section 50675.14(b)(3)(A)-(B), “persons, including persons with disabilities, and families who are ‘homeless,’ as that term is defined by Section 11302 of Title 42 of the United States Code, or who are ‘homeless youth,’ as that term is defined by paragraph (2) of subdivision (e) of Section 12957 of the Government Code.

Individuals and families currently residing in supportive housing meet the definition of ‘target population’ if the individual or family was ‘homeless,’ as that term is defined by Section 11302 of Title 42 of the United States Code, when approved for tenancy in the supportive housing project in which they currently reside.” Should this Code’s Target Population definition conflict with the California Health and Safety Code definition for this term, the California Health and Safety Code definition prevails.

SECTION 5. Deleted Definitions from LFMC Section 9.04.030. The following definitions are hereby deleted in their entirety from Section 9.04.030 (Definitions) of the Lake Forest Municipal Code:
“Agriculture Employee Quarters, Alcoholism or Drug Abuse Recovery or Treatment (AOD) Facility, Community Care Facility, and Quarters for Employee Temporary Use.”
SECTION 6. Amended Definitions in LFMC Section 9.04.030. The following definitions in Section 9.04.030 (Definitions) of the Lake Forest Municipal Code are hereby amended to read, each in its entirety, as follows:

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conflict with the California Government Code definition of this term, the Government Code definition prevails.

Transitional Housing: As defined by California Government Code section 65582(j), “buildings configured as rental housing developments, but operated under program requirements that require the termination of assistance and recirculating of the assisted unit to another eligible program recipient at a predetermined future point in time that shall be no less than six months from the beginning of the assistance.” Should this Code’s Transitional Housing definition conflict with the California Government Code definition of this term, the Government Code definition prevails.” SECTION 7. LFMC Section 9.44.020 Amendment. Subsections C, D, E, and F of Section 9.44.020 (R1 Single-Family Residential District -Principal Uses Permitted) of the Lake Forest Municipal Code are hereby amended to read, each in its entirety as follows:

C. Residential care facilities, in accordance with Chapter 5.44 (Residential Care Facilities);
D. Small and large family day care homes;
E. Limited home rentals.

SECTION 8. LFMC Section 9.48.020 Amendment. Subsections C, D, E, and F of Section 9.48.020 (RS Residential Single-Family District -Principal Uses Permitted) of the Lake Forest Municipal Code are hereby amended to read, each in its entirety as follows:

C. Residential care facilities, in accordance with Chapter 5.44 (Residential Care Facilities);
D. Small and large family day care homes;
E. Limited home rentals.

SECTION 9. LFMC Section 9.56.020 Amendment. Subsections D, E, F, and G of Section 9.56.020 (R2 Multifamily Dwellings District -Principal Uses Permitted) of the Lake Forest Municipal Code are hereby amended to read, each in its entirety as follows:

D. Residential care facilities, in accordance with Chapter 5.44 (Residential Care Facilities);
E. Small and large family day care homes;
F. Limited home rentals.

SECTION 10. LFMC Section 9.64.020 Amendment. Subsections D, E, Item: 15
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F and G of Section 9.64.020 (R4 Suburban Multifamily Dwellings District - Principal Uses Permitted) of the Lake Forest Municipal Code are hereby amended to read, each in its entirety as follows:

D. Residential care facilities, in accordance with Chapter 5.44 (Residential Care Facilities);
E. Small and large family day care homes;
F. Limited home rentals.

SECTION 11. LFMC Section 9.68.020 Amendment. Subsections C, D, E, and F of Section 9.68.020 (RP Residential-Professional District -Principal Uses Permitted) of the Lake Forest Municipal Code are hereby amended and restated to read, each in its entirety as follows:

C. Residential care facilities, in accordance with Chapter 5.44 (Residential Care Facilities);
D. Small and large family day care homes;
E. Limited home rentals.

SECTION 12. LFMC Section 9.72.090(A) Amendment. Subsection A of Section 9.72.090 (Land Use Matrix) of the Lake Forest Municipal Code is hereby amended to delete the entries and footnotes for Agriculture Quarters Housing, Community Care Facilities Serving 6 or fewer, and Transitional Housing and to add entries and footnotes for Employee Housing and Residential Care Facility” to read, each in its entirety as follows:

SECTION 13. LFMC Section 9.73.010 Amendment. Section 9.73.010 (Mixed-use districts) of the Lake Forest Municipal Code is hereby amended to read in its entirety as follows:

9.73.010 Mixed-use districts.

Use C I PA UA CAN A1 OS
Employee
Housing
X X X X X P24 P24
Residential
Care
Facility
X X X X X P25 X

24. In accordance with California Health and Safety Code section 17021.6 et seq.

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A. Types. The types of mixed-use districts include the following: mixed- use 32 (MU 32), mixed-use 43 (MU 43), mixed-use office (MUO), urban industrial 25 (UI 25), and urban industrial 43 (UI 43).

B. SB 35. Projects that qualify for streamlined approval in accordance with Senate Bill 35 (as codified in California Government Code Section 65913.4) may, upon applicant request and demonstration of eligibility, qualify for streamlined and ministerial processing. Projects subject to SB 35 streamlining must comply with this chapter’s objective design standards and with objective development standards of the zoning ordinance.

SECTION 14. LFMC Section 9.73.065 Amendment. Section 9.73.065 (Mixed-Use Land Use Matrix) of the Lake Forest Municipal Code, is hereby amended to delete the entries for Agricultural Employee Housing and Quarters for Employee Temporary Use and to add entries and footnotes for Employee Housing, Low Barrier Navigation Center,” and Residential Care Facility to read, each in its entirety as follows:

SECTION 15. LFMC Section 9.112.020(C)(1) Amendment. Subsection (C)(1) of Section 9.112.020 (PC Planned Community District -General provisions and regulations) of the Lake Forest Municipal Code is hereby amended to read in its entirety as follows:
“1. Single-Family Dwellings. In any district or area where single-family dwellings are a permitted use, permitted uses include the following:
a. Single-family detached dwellings;
Use MU 32 MU 43 MUO UI 25 UI 43
Employee
Housing X X X X X
Low-Barrier
Navigation
Center
P22 P22 X P22 P22
Residential
Care
Facilities
P23 P23 X P23 P23

22. In accordance with Section 9.146.170 (Low-
Barrier Navigation Center).

23. In accordance with Chapter 5.44 (Residential
Care Facilities)
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b. Residential care facilities, in accordance with Chapter 5.44 (Residential Care Facilities);
c. Small and large family day care homes;
d. Limited home rentals.”
SECTION 16. LFMC Section 9.146.120(D) Amendment. Subsection D of Section 9.146.120 (Emergency Shelters) of the Lake Forest Municipal Code is hereby amended to read in its entirety as follows:

D. Parking Ratio. Subject to Government Code section 65583(a)(4)(A)(ii), on-site parking shall be a minimum of one space per employee in the largest shift.

SECTION 17. LFMC Section 9.146.160 Amendment. Section

9.146.160 (Community care facilities and alcoholism or drug abuse recovery or treatment facilities) is hereby deleted in its entirety.

SECTION 18. LFMC Section 9.146.170 Amendment. Section

9.146.170 (Low-Barrier Navigation Centers) is hereby added to the Lake Forest Municipal Code to read in its entirety as follows:

9.146.170 Low-Barrier Navigation Centers
A. Purpose. The purpose of this section is to comply with California Government Code section 65660 et seq. regarding Low Barrier Navigation Centers (hereafter referred to as “LBNCs,” and each singularly an “LBNC”) B. Allowed Zones. As required by California Government Code section 65662, LBNCs that comply with this Section are permitted by right in areas zoned for mixed use and nonresidential zones permitting multifamily uses.

If this subsection (B) conflicts with any other provision of this Code, this subsection (B) prevails.

C. LBNC Streamlined Administrative Permit Required. An LBNC Streamlined Administrative Permit issued by the City is required prior to establishment or construction of any LBNC.

D. Operational and Development Standards. LBNCs must comply with all of the following:

1. Proximity to Another LBNC. No LBNC may be established or operated at any location that is less than 300 feet from another LBNC.

2. Operational Services. As required by Government Code section 65662, each LBNC must satisfy all of the following:

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a. It offers services to connect people to permanent housing through a services plan that identifies services staffing.
b. It is linked to a coordinated entry system, so that staff in the interim facility or staff who co-locate in the facility may conduct assessments and provide services to connect people to permanent housing. “Coordinated entry system” means a centralized or coordinated assessment system developed pursuant to section 576.400(d) or section 578.7(a)(8), as applicable, of Title 24 of the Code of Federal Regulations, as those sections read on January 1, 2020, and any related requirements, designed to coordinate program participant intake, assessment, and referrals.
c. It complies with Chapter 6.5 (commencing with section 8255) of Division 8 of the Welfare and Institutions Code.
d. It has a system for entering information regarding client stays, client demographics, client income, and exit Information System as defined by section 578.3 of Title 24 of the Code of Federal Regulations.

3. On-Site Personnel. Each LBNC must provide both of the following:
a. At least one qualified on-site manager at all times for each 20 occupants; and
b. At least one qualified attendant at all times for each 20 occupants.

4. Max Beds. The maximum number of beds per LBNC may not exceed one bed for every 50 square feet of floor area used for sleeping purposes.

5. Parking. Subject to Government Code section 65583(a)(4)(A)(ii), on-site parking shall be a minimum of one space per employee in the largest shift.

6. Intake Areas. The LBNC shall have a separate intake area of a minimum of 250 square feet.

7. Lighting. Outdoor lighting shall be provided in active pedestrian areas, including sidewalks, pathways, and driveways. All lighting must be stationary and permanent. Light trespass onto neighboring parcels is prohibited.

8. Security. At least one security guard shall be provided during all hours when the LBNC is in operation.

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ministerially, without discretionary review or a hearing. The Director of Community Development or the Director’s designee will notify an applicant whether the application is complete within 30 days. Action shall be taken within 60 days of when the application is determined to be complete.

F. Sunset.

1. Subject to subsection (F)(2) below, this section remains in effect until January 1, 2027, and as of that date is repealed.

2. If the Legislature amends Government Code section 65668 to extend the effective date of Government Code section 65660 et seq., then this section remains in effect until the date on which Government Code section 65660 et seq. is repealed.

SECTION 19. LFMC Section 9.146.180 Amendment. Section

9.146.180 (Transitional and Supportive Housing) of the Lake Forest Municipal Code is hereby added to read in its entirety as follows:

9.170.180 Transitional and Supportive Housing
A. Transitional Housing. In accordance with Government Code section 65583(c)(3), transitional housing is considered a residential use of property and is subject to those restrictions that apply to other residential dwellings of the same type in the same zone.

B. Supportive Housing.

1. Generally. In accordance with Government Code section 65583(c)(3), supportive housing is considered a residential use of property and is subject to those restrictions that apply to other residential dwellings of the same type in the same zone.

2. In Zones Allowing Multifamily. Supportive housing that complies with the requirements of California Government Code section 65650 et seq. is considered a use by right in all zones where multifamily uses are permitted, including mixed use zones. In accordance with Government Code section 65651(b)(1), a supportive housing development must comply with all objective development standards and policies that apply to other multifamily developments within the same zone.”
SECTION 20. LFMC Section 9.146.190 Amendment. Section

9.146.190 (Employee Housing) of the Lake Forest Municipal Code is hereby added to read in its entirety as follows:

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Section 9.146.190 Employee Housing
A. Employee Housing. In accordance with California Health and Safety Code section 17021.5, subdivision (b):

1. Employee housing with a permit from the statutory enforcement agency to serve six or fewer employees is considered a single-family residential structure.

2. No use permit, site development permit, variance, or other zoning clearance is required for employee housing serving six or fewer employees unless the same is required for a family dwelling of the same type in the same zone.

3. In accordance with California Health and Safety Code section 17007, for purposes of this subsection (A), “statutory enforcement agency” refers to the Department of Housing and Community Development unless and until the City of Lake Forest or the County of Orange assume responsibility for enforcing the Employee Housing Act under Health and Safety Code section 17050.

SECTION 21. LFMC Section 9.232.015 Amendment. Section

9.232.015 (Portola Bluff Residential District-Principal uses permitted) is hereby added to the Lake Forest Municipal Code to read in its entirety as follows:

9.232.015 Principal uses permitted
The following principal uses are permitted:

A. Residential care facilities, in accordance with Chapter 5.44 (Residential Care Facilities).

SECTION 22. LFMC Section 9.232.020 Amendment. Section

9.232.020 (Portola Bluff Residential District-Principal uses permitted subject to a site development permit) of the Lake Forest Municipal Code is hereby amended to read in its entirety as follows:

9.232.020 Principal uses permitted subject to a site development permit.

The following principal uses are permitted subject to the approval of a site development permit under Chapter 9.184:

A. Single-Family Dwelling;
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B. Open Space uses;
C. Small and large family day care homes;
D. Limited home rentals;
E. Public or private utility buildings and structures;
F. Any other use that the Planning Commission finds is consistent with the purpose and intent of this district.

SECTION 23. Effective Date. This ordinance takes effect 30 days following its adoption.

SECTION 24. Severability. If any provision of this ordinance or its application to any person or circumstance is held to be invalid by a court of competent jurisdiction, such invalidity has no effect on the other provisions or applications of the ordinance that can be given effect without the invalid provision or application, and to this extent, the provisions of this ordinance are severable.

The City Council declares that it would have adopted this ordinance irrespective of the invalidity of any portion thereof.

SECTION 25. Certification. The City Clerk is directed to certify to the adoption of this ordinance and cause it, or a summary of it, to be published once within 15 days of adoption in a newspaper of general circulation available within the City of Lake Forest, and to post a certified copy of this ordinance, including the vote for and against the same, in the office of the City Clerk in accordance with California Government Code section 36933.

SECTION 26. Record of Proceedings. The documents and materials that constitute the record of proceedings on which this ordinance and the above findings are located at the City Clerk’s office at 100 Civic Center Drive, Lake Forest, CA 92630.

PASSED, APPROVED AND ADOPTED this _____ day of _____________ 2023.

DOUG CIRBO, MAYOR
ATTEST:

LISA BERGLUND, MPA
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CITY CLERK
APPROVED AS TO FORM:

MATTHEW E. RICHARDSON

CITY ATTORNEY

STATE OF CALIFORNIA )

COUNTY OF ORANGE ) SS

CITY OF LAKE FOREST )
I, Lisa Berglund, City Clerk of the City of Lake Forest, do hereby certify that the foregoing Ordinance No. _______ was duly introduced and placed upon its first reading at a regular meeting of the City Council on the ___ day of ________, 2023, and thereafter, said ordinance was duly adopted and passed at a regular meeting of the City Council on the ___ day of _____ 2023, by the following vote, to wit:

AYES: COUNCIL MEMBERS
NOES: COUNCIL MEMBERS
ABSENT: COUNCIL MEMBERS
ABSTAIN: COUNCIL MEMBERS

LISA BERGLUND

CITY CLERK
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1 Attachment 2
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ORDINANCE NO. _____

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
LAKE FOREST, CALIFORNIA, ADDING CHAPTER 5.44 TO

THE LAKE FOREST MUNICIPAL CODE REGARDING

RESIDENTIAL CARE FACILITIES AND FINDING THE

ACTION TO BE EXEMPT FROM CEQA UNDER STATE
CEQA GUIDELINES SECTIONS 15060(c)(1) AND
15061(b)(3)
WHEREAS, the 2021–2029 (6th cycle) Lake Forest Housing Element (“Housing Element”) was approved by the City Council on January 6, 2023, and certified by the California Housing and Community Development Department (“HCD”) on February 24, 2023; and
WHEREAS, the Housing Element includes Housing Program 7: Zoning Code Amendments - Housing Constraints, which requires the City to update the Zoning Code to remove constraints to housing development and ensure that the City’s standards and permitting requirements are consistent with state law; and WHEREAS, among other things, Housing Program 7 provides that the City will update the Lake Forest Municipal Code to: (i) allow residential care facilities serving seven or more individuals in all residential zones and (ii) adopt objective standards for these uses to promote approval certainty and consistency with state and federal laws; and
WHEREAS, effectuating the above LFMC updates involves amendments to Titles 9 (Zoning) and 5 (Business Regulations). The City is concurrently processing Zoning Code Amendment (“ZCA”) 04-23-5616, which implements the Title 9 portions of Housing Program 7; and
WHEREAS, this ordinance implements the Title 5 portion of Housing Program 7 by establishing operational and licensing standards for residential care facilities, which are codified in the new LFMC Chapter 5.44; and WHEREAS, on June 6, 2023, the City Council held a duly-noticed public hearing and considered the staff report, recommendations by staff, and public testimony concerning this ordinance; and
WHEREAS, all legal prerequisites to the adoption of this ordinance have occurred.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE
FOREST, CALIFORNIA DOES ORDAIN AS FOLLOWS:

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SECTION 1. Incorporation of Recitals. The City Council hereby finds and determines that the Recitals above are true and correct and incorporated herein.

SECTION 2. CEQA. The City Council finds that this ordinance is not subject to the California Environmental Quality Act (“CEQA”) for several separate and independent reasons. First, approval of the ordinance is not subject to CEQA because it does not constitute a discretionary project subject to CEQA. This code amendment ensures that City’s standards and permitting requirements are consistent with state law and fair housing laws, as required by HCD. The amendment merely codifies these requirements in the LFMC. (See State CEQA Guidelines, § 15060(c)(1) [activity that does not involve exercise of discretionary power by a public agency not subject to CEQA].) Second, approval of the ordinance is exempt from CEQA under State CEQA Guidelines section 15061(b)(3), which exempts projects from CEQA where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. Here, there is no possibility that the ordinance may have a significant effect on the environment because it merely amends the LFMC to be consistent with state law and fair housing laws, which are already binding on the City.

SECTION 3. Code Amendment. Chapter 5.44 is hereby added to the Lake Forest Municipal Code to read in its entirety as follows:

Chapter 5.44 – Residential Care Facilities
Section 5.44.010 - License Required; Streamlined Administrative Approval A. Exemptions. When required by state or federal law, a Residential Care Facility (hereafter “RCF”) serving six or fewer persons is:

1. Exempt from this chapter; and

2. Considered a residential use of property and a single family for purposes of Title 9 of this Code.

B. License Required. Unless exempt under subsection (A) above, an RCF License issued by the City is required to operate.

C. Operational and Development Standards. An application for an RCF License is subject to administrative review and will be approved if it satisfies each of the following:

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1. Separation. No RCF may be established or operated in any location that is less than 300 feet from another RCF.

2. Maximum Occupancy. No more than two residents reside in each bedroom, not including the room or apartment designated for an onsite house manager.

3. The operator provides an onsite house manager that resides full- time (year-round) in a room or apartment on the property.

4. Management Plan. The City has approved a property
management plan for the facility that addresses each of the following: onsite management, maximum occupancy, quiet
hours and permitted guest visitation hours, loitering, littering, and disturbing the peace, nuisance reduction, trash collection, smoking, resident pick-up and drop-off procedures, and
discharge. City approval is required for any modifications to the plan.

5. Emergency and Security Plan. The City has approved an emergency and security plan that addresses each of the
following: security and management contact information, authority and responsibility of security staff, a map of the property, and overview of the property’s security features, security feature testing schedule, overnight parking policies and vehicle violation abatement procedures, emergency medical response protocols, emergency law enforcement response
protocols, and daytime and nighttime security monitoring procedures. City approval is required for any modifications to the plan.

D. Streamlined Administrative Application Review. The Director of Community Development or the Director’s designee will review and process RCF License applications ministerially, without discretionary review or a hearing. The Director will notify an applicant whether the application is complete within 30 days. The Director will render a decision on the application within 60 days of when the application was determined to be complete.

E. Modifications or Revocation.

1. An RCF License may be revoked when the application contained Item: 15
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incorrect, false or misleading information, or the operator violates the management plan or the emergency and security plan, of if three or more nuisance citations are issued at the property within a 30-day period.

2. Before revoking an RCF license, a good faith effort to meet and confer with the operator will be made to resolve any of the issues identified in subsection (E)(1) above.

3. The operator will be notified of any revocation by first-class mail with return receipt requested. The operator may appeal the revocation to a hearing officer in accordance with Chapter 1.12 of this Code.

F. Conflict. If this chapter conflicts with any other provision of this Code, this chapter prevails.

SECTION 4. Effective Date. This ordinance takes effect 30 days following its adoption.

SECTION 5. Severability. If any provision of this ordinance or its application to any person or circumstance is held to be invalid by a court of competent jurisdiction, such invalidity has no effect on the other provisions or applications of the ordinance that can be given effect without the invalid provision or application, and to this extent, the provisions of this ordinance are severable.

The City Council declares that it would have adopted this ordinance irrespective of the invalidity of any portion thereof.

SECTION 6. Certification. The City Clerk is directed to certify to the adoption of this ordinance and cause it, or a summary of it, to be published once within 15 days of adoption in a newspaper of general circulation available within the City of Lake Forest, and to post a certified copy of this ordinance, including the vote for and against the same, in the office of the City Clerk in accordance with California Government Code section 36933.

SECTION 7. Record of Proceedings. The documents and materials that constitute the record of proceedings on which this ordinance and the above findings are located at the City Clerk’s office at 100 Civic Center Drive, Lake Forest, CA 92630.

PASSED, APPROVED AND ADOPTED this _____ day of _____________ 2023.

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DOUG CIRBO, MAYOR
ATTEST:

LISA BERGLUND, MPA

CITY CLERK
APPROVED AS TO FORM:

MATTHEW E. RICHARDSON

CITY ATTORNEY

STATE OF CALIFORNIA )

COUNTY OF ORANGE ) SS

AYES: COUNCIL MEMBERS
NOES: COUNCIL MEMBERS
ABSENT: COUNCIL MEMBERS
ABSTAIN: COUNCIL MEMBERS

LISA BERGLUND, CITY CLERK
Item: 15
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Attachment 3
Item: 15
651

RESOLUTION NO. 2023-06

A RESOLUTION OF THE PLANNING COMMISSION

OF THE CITY OF LAKE FOREST RECOMMENDING

THE CITY COUNCIL ADOPT AN ORDINANCE
AMENDING TITLE 9 OF THE LAKE FOREST

MUNICIPAL CODE TO ADDRESS LOW BARRIER

NAVIGATION CENTERS, TRANSITIONAL AND

SUPPORTIVE HOUSING, EMPLOYEE HOUSING,

EMERGENCY SHELTER PARKING, AND

RESIDENTIAL CARE FACILITIES AND FINDING THE

ACTION TO BE EXEMPT FROM CEQA UNDER STATE
CEQA GUIDELINES SECTIONS 15060(c)(1) AND
15061(b)(3}
WHEREAS, on February 24, 2023, the California Department of Housing and Community Developed certified the City's Housing Element for the 2021-2029 (6th cycle) planning period; and
WHEREAS, the Housing Element includes Housing Program 7: Zoning Code Amendments - Housing Constraints, which requires the City to update the Zoning Code to remove constraints to housing development and ensure that the City's standards and permitting requirements are consistent with state law.

Specifically, Housing Program 7 requires code amendments related to low barrier navigation centers, transitional arid supportive housing, employee housing, emergency shelter parking, and residential care facilities; and WHEREAS, the City initiated Zoning Code Amendmentf'ZCA") 04-23-5616 to amend Title 9 of the Lake Forest Municipal Code to implement Housing Element Program 7; and
WHEREAS, on April 20, 2023, the City gave public notice of the public hearing for ZCA 04-23-5616 by publishing the required notice in a newspaper of general circulatiol'.1 and posting the notice at City Hall; and WHEREAS, in accordance with LFMC section 9.196.020, on April 24, 2023, the Director of Community Development made the draft ordinance available for public inspection in the Department of Community Development offices and supplied it at cost to all persons desiring a copy; and WHEREAS, on May 4, 2023, the Planning Commission held a duly-noticed public hearing and considered the staff report, recommendations by staff, and public testimony concerning ZCA 04-23-5616.

Item: 15
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NOW, THEREFORE, the Planning Commission of the City of Lake Forest does hereby resolve as follows:

Section 1. Incorporation of Recitals. The Planning Commission hereby finds a·nd determines that the Recitals above are true and correct and incorporated ' herein.

Section 2. CEQA. The Planning Commission finds that Zoning Code Amendment 04-23-5616 (the Amendment) is not subject to the California Environmental Quality Act ("CEQA") for several separate and independent reasons. First, approval of the Amendment is not subject to CEQA because it does not constitute a discretionary project subject to CEQA. This code amendment ensures that City's standards and permitting requirements are consistent with state law and fair housing laws, as required by the California Department of Housing and Community Development ("HCD"). The amendment merely codifies these requirements in the City's Zoning Code. (See State CEQA Guidelines, § 15060(c)(1) [activity that does not involve exercise of discretionary power by a public agency not subject to CEQA].) Second, approval of the amendment is exempt from CEQA under State CEQA Guidelines section 15061(b)(3), which exempts projects from CEQA where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. Here, there is no possibility that the amendment may have a significant effect on the environment because it merely amends the Zoning Code to be consistent with state laws and fair housing laws, as required by HCD, which are already binding on the City.

Section 3. General Plan. Based on the entire record before the Planning Commission, including all written and oral evidence presented, the Planning Commission hereby finds and determines that ZCA 04-23-5616 is consistent with the City's adopted General Plan because it implements Housing Element Housing Program 7, as certified by HCD.

Section 4. Recommendation. Based on the foregoing recitals and findings, the Planning Commission hereby recommends that the City Council approve and adopt the proposed ordinance (i.e., ZCA 04-23•5616) attached as _Exhibit "A" hereto and incorporated herein by reference.

Section 5. Certification. The Planning Commission Chair shall sign and the Secretary shall attest to the adoption of this Resolution.

Section 6. Effective Date. This Resolution takes effect immediately upon its adoption.

Planning Commission
Resolution No. 2023-6

Page 2 ends

Item: 15
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APPROVED this 4th day of May 2023, by the following vote, to wit:

AYES: Fuentes, Ludden, Stannard
NOES: None
ABSENT: Barajas, Villwock
ABSTAINED: None
-i~t J 1,{( 1/ ✓ lt '/ ~ _,,.... LI ;u

JOLENE FUENTES DATE-
CHAIR
ATTEST:
~ - S1r GAYLEff ERMAN, AICP DATE
Planning Commission
Resolution No. 2023-6

Page 3 ends

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Attachment 4
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1 Attachment 2A
Low-Barrier Navigation Centers Code Amendments
(Additional text is underlined and deleted text is struck-through) Table 9.73.065 Mixed-Use Land Use Matrix
Use MU 32 MU 43 MUO UI 25 UI 43
Low-Barrier Navigation Center P22 P22 X P22 P22
Footnote:

22. In accordance with Section 9.146.170 (Low-Barrier Navigation Center).

9.04.030 Definitions.

Low-Barrier Navigation Center: As defined by California Government Code section 65660(a), “a Housing-First, low -barrier, service -enriched shelter focused on moving people into permanent housing that provides temporary living facilities while case managers connect individuals experiencing homelessness to income, public benefits, health services, shelter, an d housing. ’Low barrier ’ means best practices to reduce barriers to entry, and may include, but is not limited to, the following:
(1) The presence of partners if it is not a population -specific site, such as for survivors of domestic violence or sexual assault, women, or youth. (2) Pets.
(3) The storage of possessions.
(4) Privacy, such as partitions around beds in a dormitory setting or in larger rooms containing more than two beds, or private rooms.” Should this Code’s Low-Barrier Navigation Center definition con flict with Government Code section 65660(a), the Government Code definition prevails.

2 B. Allowed Zones. As required by California Government Code section 65662, LBNCs that comply with this S ection are permitted by right in areas zoned for mixed use and nonresidential zones permitting multifamily uses. If this subsection (B) conflicts with any other provision of this Code, this subsection (B) prevails.

C. LBNC Streamlined Administrative Permit Required. An LBNC Streamlined Administrative Permit issued by the City is required prior to establishment or construction of any LBNC.

D. Operational and Development Standards. LBNCs must comply with al l of the following:

1. Proximity to Another LBNC. No LBNC may be established or operated at any location that is less than 300 feet from another LBNC.

2. Operational Services. As required by Government Code section 65662, each LBNC must satisfy all of the following:
a. It offers services to connect people to permanent housing through a services plan that identifies services staffing.
b. It is linked to a coordinated entry system, so that staff in the interim facility or staff who co-locate in the facility may conduct assessments and provide services to connect people to permanent housing. “Coordinated entry system” means a centralized or coordinated assessment system developed pursuant to section 576.400(d) or section 578.7(a)(8), as applicable, of Title 24 of the Code of Federal Regulations, as those sections read on January 1, 2020, and any related requirements, designed to coordinate pr ogram participant intake, assessment, and referrals.
c. It complies with Chapter 6.5 (commencing with section 8255) of Division 8 of the Welfare and Institutions Code.
d. It has a system for entering information regarding client stays, client demographics, client income, and exit Information System as defined by section 578.3 of Title 24 of the Code of Federal Regulations.

3. On-Site Personnel. Each LBNC must provide both of the following:
a. At least one qualified on -site manager at all times for each 20 occupants; and
b. At least one qualified attendant at all times for each 20 occupants.

4. Max Beds. The maximum number of beds per LBNC may not exceed one bed for every 50 square feet of floor area used for sleeping purposes.

Attachment 4
Item: 15
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3 5. Parking. Subject to Government Code section 65583(a)(4)(A)(ii), on-site parking shall be a minimum of one space per employee in the largest shift.

6. Intake Areas. The LBNC shall have a separate intake area of a minimum of 250 square feet.

8. Security. At least one security guard shall be provided during all hours when the LBNC is in operation.

E. Streamlined Administrative Review Procedures. An application for an LBNC Streamlined Administrative Permit will be reviewed and processed ministerially, without discretionary review or a hearing. The Director of Community Development or the Director’s designee will notify an applicant whether the application is complete within 30 days. Action shall be taken within 60 days of when the application is determined to be complete.

F. Sunset.

1. Subject to subsection ( F)(2) below, this section remain s in effect until January 1, 2027, and as of that date is repealed.

2. If the Legislature amends Government Code section 65668 to extend the effective date of Government Code section 65660 et seq., then this section remain s in effect until the date on which Government Code section 65660 et seq. is repealed.”

Attachment 4
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4 Attachment 2B
Transitional and Supportive Housing Code Amendments
(Additional text is underlined and deleted text is struck-through)

9.04.030 Definitions.

Supportive Housing: As defined by California Government Code section 65650(a), “housing with no limit on length of stay, that is occupied by the target population, and that is linked to onsite or offsite services that assist the supportive housing resident in retaining the housing, improving their health status, and maximizing their ability to live and, when possible, work in the community.” Should this Code’s Supportive Housing definition conflict with the California Government C ode definition of this term, the Government Code definition prevails . As defined by California Health and Safety Code Section 50675.14(a) and (b)(2), it is a multifamily housing project funded with funds appropriated by the State for supportive housing pro jects where the project provides “housing with no limit on length of stay, that is occupied by the target [homeless] population, and that is linked to on-site or off-site services that assist the supportive housing resident in retaining the housing, improving his or her health status, and maximizing his or her ability to live and, when possible, work in the community.” Supportive housing may take various forms. See “Single Housekeeping Unit” and “Transitory Lodging.”

Target Population: As defined by California Health and Safety Code s ection 50675.14(b)(3)(A)-(B), “persons, including persons with disa bilities, and families who are ‘homeless,’ as that term is defined by Section 11302 of Title 42 of the United States Code, or who are ‘homeless youth,’ as that term is defined by paragraph (2) of subdivision (e) of Section 12957 of the Government Code.

Individuals and families currently residing in supportive housing meet the definition of ‘target population’ if the individual or family was ‘homeless,’ as t hat term is defined by Section 11302 of Title 42 of the United States Code, when approved for tenancy in the supportive housing project in which they currently reside.” Should this Code’s Target Population definition conflict with the California Health and Safety Code definition for this term, the California Health and Safety Code definition prevails.

5 assistance.” Should this Code’s Transitional Housing definition conflict with the California Government Code definition of this term, the Government Code definition prevails . As defined by California Health and Safety Code Section 50675.2(h), “Transitional housing” and “transitional housing development” means buildings configured as rental housing developments, but operated under [multifamily housing] program requirements that call for the termination of assistance and recirculation of the assisted unit to another eligible program recipient at some predetermined future point in time, which shall be no less than six (6) months. Transitional housing may take various forms. See “Si ngle Housekeeping Unit” and “Transitory Lodging.”

Table 9.72.090(A) Land Use Matrix

Use C I PA UA CAN A1 OS
Transitional Housing X7 X7 X7 X7 X7 X7 X7

Footnote:

7: Transitional Housing allowed in residential zones.

9.170.180 Transitional and Supportive Housing

A. Transitional Housing. In accordance with Government Code section 65583(c)(3), transitional housing is considered a residential use of property and is subject to those restrictions that apply to other residential dwellings of the same type in the same zone.

B. Supportive Housing.

2. In Zones Allowing Multifamily. S upportive housing that complies with the requirements of California Government Code section 65650 et seq. is considered a use by right in all zones where m ultifamily uses are permitted, including mixed use zones. In a ccordance with Government Code s ection 65651(b)(1), a supportive housing development must comply with all objective development standards and policies that apply to other multifamily development s within the same zone.

Attachment 4
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6 Attachment 2C
Employee Housing Code Amendments
(Additional text is underlined and deleted text is struck-through)

Employee Housing

9.04.030 Definitions.

Agriculture Employee Quarters: Housing quarters for agricultural employees located upon the same land occupied by their employer. Housing quarters shall not exceed twelve (12) units or thirty-six (36) beds.

Quarters for Employee Temporary Use: Quarters for the temporary (no longer than thirty (30) days) housing of agri cultural and domestic employees when such quarters are located upon the same land occupied by their employer.

Employee Housing: has the same meaning as in California Health and Safety Code section 17008(a) as that section is amended from time to time.

Table 9.72.090(A) Land Use Matrix

Use C I PA UA CAN A1 OS
Agriculture Employee Quarters
Housing
X X X X X P24 P24
Quarters for employee temporary
use X X X X X S X

Footnote:

24: In accordance with California Health and Safety Code section 17021.6 et seq.

Table 9.73.065 Mixed-Use Land Use Matrix

Use MU 32 MU 43 MUO UI 25 UI 43
Agriculture Employee quarters
Housing X X
X
X
X

Quarters for employee
temporary use X X X X X

Section 9.146.190 Employee Housing

Attachment 4
Item: 15
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7 A. Employee Housing. In ac cordance with California Health and Safety Code section 17021.5, subdivision (b):

1. Employee housing with a permit from the statutory enforcement agency to serve six or fewer employees is considered a single -family residential structure.

Attachment 4
Item: 15
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8 Attachment 2D
Streamlined and Ministerial review for Eligible
Affordable Housing Projects Code Amendments
(Additional text is underlined and deleted text is struck-through)

9.73.010 Mixed-use districts.

A. The types of mixed -use districts include the following: mixed -use 32 (MU 32), mixed -use 43 (MU 43), mixed -use office (MUO), urban industrial 25 (UI 25), and urban industrial 43 (UI 43).

Attachment 4
Item: 15
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9 Attachment 2E
Emergency Shelters Code Amendments
(Additional text is underlined and deleted text is struck-through)

9.146.120 Emergency shelters.

D. Parking Ratio. One (1) space per three (3) beds. Subject to Government Code section 65583(a)(4)(A)(ii), on-site parking shall be a minimum of one space per employee in the largest shift.

Attachment 4
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10 Attachment 2F
Residential Care Facilities Code Amendments
(Additional text is underlined and deleted text is struck-through)

9.04.030 Definitions.

Alcoholism or Drug Abuse Recovery or Treatment (AOD) Facility: As defined by California Health and Safety Code Section 11834.02, “any premises, place, or building that provides 24 -hour residential nonmedical services to adults who are recovering from problems related to alcohol, drug, or alcohol and drug misuse or abuse, and who need alcohol, drug, or alcohol and drug recovery treatment or detoxification services.”
Community Care Facility: As defined by California Health and Safety Code Section 1502(a), “any facility, place, or building that is maintained and operated to provide nonmedical residential care, day treatment, adult day care, or foster family agency services for children, adults, or children and adults, including, but not limited to, the physically handicapped, mentally impaired, incompetent persons, and abused or neglected children.” (See California Health and Safety Code Section 1502(a)(1)–(18) for types of community care facilities; Section 1505 for uses that are not community care facilities.)
Residential Care Facility: An intermediate care facility/developmentally disabled - habilitative or an intermediate care facility/developmentally disabled–nursing, as defined by California Health and Safety Code section 1250; a congregate living health facility, as defined by California Health and Safety Code section 1250; a community care facility, as defined by California Health and Safety Code s ection 1502; a residential care facility for the elderly, as defined by California Health and Safety Code section 1569.2; a residential care facility for persons with chronic life- threatening illness, as defined by California Health and Safety Code section 1568.01; an alcoholism or drug abuse recovery or treatment facility, as defined by California Health and Safety Code section 11834.02; a pediatric day health and respite care facility, as defined by California Health and Safety Code section 1760.2; or a family care home, foster home, or group home serving persons with mental health disorders or other disabilities or dependent and neglected children under California Welfare and Institutions Code section 5116.

R1 Single-Family Residential District
Section 9.44.020 Principal uses permitted
Attachment 4
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11 C. Alcoholism or drug abuse recovery or treatment facilities that are each licensed by the State to serve six (6) or fewer persons; D. Community Residential care facilities, in accordance with Chapte r

5.44 (Residential Care Facilities). that are each licensed by the State to serve six (6) or fewer persons, as long as they are not within three hundred (300) feet of another community care facility(as required by Government Code Section 1520.5);
ED. Small and large family day care homes;
FE. Limited home rentals.

RS Residential Single-Family District
Section 9.48.020 Principal uses permitted
C. Alcoholism or drug abuse recovery or treatment facilities that are each licensed by the State to serve six (6) or fewer persons; D. Community Residential care facilities, in accordance with Chapter

R2 Multifamily Dwellings District
Section 9.56.020 Principal uses permitted
D. Alcoholism or drug abuse recovery or treatment facilities that are each licensed by the State to serve six (6) or fewer persons; E. Community Residential care facilities, in accordance with Chapter

5.44 (Residential Care Facilities). that are each licensed by the State to serve six (6) or fewer persons, as long as they are not within three hundred (300) feet of another community care facility(as required by Government Code Section 1520.5);
FE. Small and large family day care homes;
GF. Limited home rentals.

Attachment 4
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12 R4 Suburban Multifamily Residential District
Section 9.64.020 Principal uses permitted
D. Alcoholism or drug abuse recovery or treatment facilities that are each licensed by the State to serve six (6) or fewer persons; E. Community Residential care facilities, in accordance with Chapter

5.44 (Residential Care Facilities). that are each licensed by the State to serve six (6) or fewer persons, as long as they are not within three hundred (300) feet of another community care facility(as required by Government Code Section 1520.5);
FE. Small and large family day care homes;
GF. Limited home rentals.

RP Residential- Professional District

Section 9.68.020 Principal uses permitted

C. Alcoholism or drug abuse recovery or treatment facilities that are each licensed by the State to serve six (6) or fewer persons; D. Community Residential care facilities, in accordance with Chapter

Table 9.72.090(A) Land Use Matrix
Use C I PA UA CAN A1 OS
Community
Residential
Care
Facilities
serving 6
or fewer
X X X X X P25 X

Attachment 4
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13 Footnote:

25. In accordance with Chapter 5.44 (Residential Care Facilities) Table 9.73.065 Mixed-Use Land Use Matrix
Use MU
32 MU
43 MUO UI 25 UI 43
Residential
Care
Facilities
P23 P23 X P23 P23

Footnote:

23. In accordance with Chapter 5.44 (Residential Care Facilities)

PC Planned Community District

Section 9.112.020 (C)(1) General provisions and regulations

1. Single-Family Dwellings. In any district or area where single-family dwellings are a permitted use, the permitted use shall be deemed to include the following:

a. Single-family detached dwellings;
b. Alcoholism or drug abuse recovery or treatment facilities that are each licensed by the State to serve six (6) or fewer persons; c. Community Residential care facilities, in accordance with Chapter

5.44 (Residential Care Facilities). that are each licensed by the State to serve six (6) or fewer persons, as long as they are not within three hundred (300) feet of another community care facility(as required by Government Code Section 1520.5);
dc. Small and large family day care homes;
ed. Limited home rentals.

9.146.160 Community care facilities and alcoholism or drug abuse recovery or treatment facilities.

Attachment 4
Item: 15
668

14 A. Small. Community care facilities and AOD facilities that are licensed to serve six (6) or fewer persons shall be permitted in any district, planned community, or specific plan area zoned for single -family dwellings and shall be regarded as a single -family dwelling for purposes of zoning and land use regulations to the extent that state or federal law requires it.

B. Large. Community care facilities and AOD facilities that are licensed to serve more than six (6) persons shall be permitted in the A1 Agriculture district, subject to the approval of a use permit by the Planning Commission per Section 9.184.010.

C. A community care facility may not locate within three hundred (300) feet of another community care facility (as required by Government Code Section 1520.5).

Portola Bluff Residential District

9.232.015 Principal uses permitted

The following principal uses are permitted:

A. Residential care facilities, in accordance with Chapter 5.44 (Residential Care Facilities).

9.232.020 Principal uses permitted subject to a site development permit.

The following principal uses are permitted subject to the approval of a site development permit under Chapter 9.184:

A. Single-Family Dwelling;
B. Open Space uses;
C. Alcoholism or drug abuse recovery or treatment facilities that are each licensed by the State to serve six (6) or fewer persons; D. Community care facilities that are each licensed by the State to serve six (6) or fewer persons, but no community care facility may be located within three hundred (300) feet of another community care facility (as required by Government Code Section 1520.5);
E. C. Small and large family day care homes;
F. D. Limited home rentals;
G. E. Public or private utility buildings and structures; Attachment 4
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15 H. F. Any other use that the Planning Commission finds is consistent with the purpose and intent of this district.

Chapter 5.44 – Residential Care Facilities
Section 5.44.010 - License Required; Streamlined Administrative Approval

A. Exemptions. When required by state or federal law, a Residential Care Facility (hereafter “RCF”) serving six or fewer persons is:

1. Exempt from this chapter; and

2. Considered a residential use of property and a single family for purposes of Title 9 of this Code.

B. License Required. Unless exempt under subsection (A) above, an RCF License issued by the City is required to operate.

C. Operational and Development Standards. An application for an RCF License is subject to administrative review and will be app roved if it satisfies each of the following:

1. Separation. No RCF may be established or operated in any location that is less than 300 feet from another RCF.

2. Maximum Occupancy. No more than two residents reside in each bedroom, not including the room or apartment designated for an onsite house manager.

3. The operator provides an onsite house manager that resides full - time (year-round) in a room or apartment on the property.

4. Management Plan. The City has approved a property
management plan for the facility that addresses each of the following: onsite management, maximum occupancy, quiet hours and permitted guest visitation hours, loitering, littering, and disturbing the peace, nuisance reduction, trash collection, smoking, resident pick -up and drop -off procedures, and discharge. City approval is required for any modifications to the plan.

Attachment 4
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16 5. Emergency and Security Plan. The City has approved an emergency and security plan that addresses each of the following:
security and management contact information, authority and responsibility of security staff, a map of the property, and overview of the property’s security features, security feature testing schedule, overnight parking polic ies and vehicle violation abatement procedures, emergency medical response protocols, emergency law enforcement response protocols, and daytime and nighttime security monitoring procedures. City approval is required for any modifications to the plan.

D. Streamlined Administrative Application Review. The Director of Community Development or the Director’s designee will review and process RCF License applications ministerially, without discretionary review or a hearing. The Director will notify an applicant wh ether the application is complete within 30 days. The Director will render a decision on the application within 60 days of when the application was determined to be complete.

E. Modifications or Revocation.

1. An RCF License may be revoked when the applicat ion contained incorrect, false or misleading information, or the operator violates the management plan or the emergency and security plan, of if three or more nuisance citations are issued at the property within a 30-day period.

2. Before revoking an RCF license, a good faith effort to meet and confer with the operator will be made to resolve any of the issues identified in subsection (E)(1) above.

3. The operator will be notified of any revocation by first -class mail with return rece ipt requested. The operator may appeal the revocation to a hearing officer in accordance with Chapter 1.12 of this Code.

F. Conflict. If this chapter conflicts with any other provision of this Code, this chapter prevails.

Attachment 4
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Attachment 5
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City of Lake Forest GENERAL PLAN Adopted Housing Element Housing Plan 15 Addressed: Program 7: Zoning Code Amendments – Housing Constraints A. Mixed-Use Standards-M- information. Low Barrier Navigation Centers---use in -family uses . C. Transitional and Supportive Housing to ensure are -use s in -ermitted Government Code Employee Housing and Agricultural Worker Housing. fer to it as E. Streamlined and Ministerial Review for Eligible Affordable Housing Projects-family only for F. Emergency Shelter Parking an not require Item: 15
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City of Lake Forest GENERAL PLAN Adopted Housing Element Housing Plan 16 G. Residential Care Facilities. of seven or more . H. Reasonable Accommodation. MCC- tate and federal fair-CCCC-MC C. Community General Fund - . Addressed: Addressed: -Home or Community- Program 8: Accessory Dwelling Units - and moderate- Item: 15
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Attachment 6

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CITY COUNCIL AGENDA REPORT
MEETING DATE: 6/6/2023
DEPARTMENT: City Manager
SUBJECT:

AGREEMENT WITH THE COUNTY OF ORANGE FOR LAW ENFORCEMENT

SERVICES
RECOMMENDED ACTION(S):

Approve and authorize the Mayor to sign the Agreement with the County of Orange for Law Enforcement Services for Fiscal Year 2023-24.

EXECUTIVE SUMMARY:

The City of Lake Forest contracts with the Orange County Sheriff’s Department (“OCSD”) for law enforcement services. The proposed cost for the attached Fiscal Year 2023-24 Law Enforcement Agreement (“OCSD Agreement”) is $19,629,237, which is $77,894 or 0.40% less than the current fiscal year (Attachment 1). This year-over-year decrease is primarily due to the one-time purchase of body worn cameras during the Fiscal Year 2022-23 contract year and a percentage decrease in the Regional Shared Staff costs. OCSD management is currently in labor negotiations with bargaining units that represent sheriff’s deputies and other personnel. Once negotiations are finalized (likely during the first quarter of Fiscal Year 2023-24), staff plan to return the City Council with an updated agreement that includes more compensation to accommodate the likely wage increases provided to sheriff’s deputies and other personnel. The proposed OCSD Agreement includes a staffing plan that describes personnel and other resource allocations (Attachment 2).

Through proactive policing and partnership with the community, Lake Forest consistently has one of the lowest crime rates within Orange County. A historical record of “Part 1” crimes is provided as Attachment 3, which documents significant local crimes (Attachment 3).

Staff recommends the City Council approve the new one-year OCSD Agreement.

The proposed 2023-2025 Operating Budget includes sufficient funding to cover the costs of the recommended action.

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BACKGROUND:

When the City incorporated in 1991, the “contract city” service model was implemented for a variety of public services, including law enforcement.

Consequently, the City has a long-standing contractual relationship with OCSD, which also provides law enforcement services to 12 other Orange County cities.

The contract service model has been an effective and efficient model for service delivery and crime mitigation. The City’s annual contract with OCSD includes salaries, benefits, and other associated overhead costs for the number of direct and shared positions required to support public safety and police operations within the City’s boundaries. Cities that contract with OCSD capitalize on the economies of scale associated with the sharing of certain facilities, vehicles, training, personnel, specialized policing units (i.e., Directed Enforcement Team, Special Enforcement Team, Behavioral Health Bureau, Special Weapons and Tactics, and the Gang Enforcement Team) and other costs. Each year, as part of the City’s budget compilation process, staff reviews the proposed costs associated with these services and presents an annual contract with OCSD to the City Council for consideration.

DISCUSSION:

Year in Review
The OCSD continues its partnership with the community to reduce and prevent crime in Lake Forest through various initiatives. Highlights from calendar year 2022 include:
♦3,264 service hours donated by the Sheriff’s Team of Active Retired Seniors (“STARS”).
♦Homeless Liaison Officer (”HLO”) placed one homeless family into housing in partnership with other organizations as well as providing resources related to substance abuse, disability, mental health, medical issues, and veteran services.
♦Continued to refine emergency response services in partnership with the Orange County Fire Authority.
♦Helped the City implement an additional 27 Automated License Plate Reader (“ALPR”) camera locations throughout the city.
♦Reestablished the Business Watch Program.
♦Met with several Homeowner Associations to discuss issues related to their neighborhood.
♦Maintained an average call for service response time of less than five minutes.

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Traffic Enforcement Statistics
The recommended California State Office of Traffic Safety (“OTS”) Traffic Enforcement Index is between 25%-35%. This index is determined by dividing the number of hazardous violations by the number of fatal and injury collisions. In 2022, the City‘s Traffic Enforcement Index was below that range at 18%. There was an increase in the number of fatal traffic accidents from four to six from the prior year and the number of injury traffic accidents decreased by 8%. A three- year comparison of traffic enforcement statistics is provided in Table 1.

Table 1: Traffic Enforcement Statistics
Incident Type 2020 2021 2022
Hazardous Moving Citation 1,603 1,018 2,591
Non-Hazardous Citations 1,254 726 453
Fatal Traffic Accidents 1 4 6
Injury Traffic Accidents 14 150 138
Calls for Service
Calls for Service include calls that were generated from dispatch and by the patrol deputies’ self-initiated observations. In 2022, there was a 3% increase in the total number of Calls for Services and a decrease in average response time of 3.82%. Of these calls for services, those that are potential life-threatening incidents are identified as “Priority 1” calls. Table 2 provides a three-year comparison of response times for all Calls for Service.

Table 2: Calls for Service and Response Times
Metric 2020 2021 2022
Total Calls for
Service
27,087 26,519 27,329
Priority One Calls 375 427 423
Response Times
for Priority One
Calls
4:17 min 4:45 min 4:28 min
Reports of Crime and Crime Rates
The Uniform Crime Reporting (“UCR”) database, which includes the official record of Part 1 Crimes, is reported on a calendar year basis by the Federal Bureau of Investigation (“FBI”). In terms of the number of reported crimes and the crime rate, numerous factors may affect these figures, in either a positive or negative direction. Furthermore, the crime statistics over a single year do not provide a sufficient basis to establish a crime trend. Consequently, when discussing crime, a more longitudinal approach provides a greater level of Item: 16
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context and the ability to identify potential trends. Nonetheless, OCSD regularly provides Part 1 crime statistics to the City and the information is posted on the City’s website. Part 1 Crimes are defined as violent or serious crimes, such as homicide, rape, burglary, and auto theft. Staff have attached the Part 1 Crime Statistics provided by OCSD. The statistics are provided for the past five years (Attachment 1).

Table 3 shows the total Part 1 Crimes, as provided by OCSD, from 2017-2021.

Traditionally, Part 1 crime data is documented under the Uniform Crime Reporting (“UCR”) Program administered by the U.S. Department of Justice.

During the 2021 calendar year, the National Incident-Based Reporting System (“NIBRS”) was introduced to replace UCR. Because of this change, OCSD manually reconciled UCR Part 1 crime data into the NIBRS system for 2021.

Unfortunately, this data has not yet been certified by the Department of Justice.

As a result, the official Part 1 crime record is limited to data collected through May 2021. Table 3 shows UCR Part 1 crime data for Lake Forest since 2017 but reflects only January through May for 2021.

Table 3: Annual Lake Forest Part 1 Crimes 2017-2021

Proposed Fiscal Year 2023-24 Agreement
On an annual basis, OCSD prepares an estimate of potential costs that initiates the development of annual contracts with various cities. This process is purposefully iterative in that the OCSD works closely with contract cities and presents subsequent estimates of potential costs based on its operations, desired service levels, and other general feedback from the community. As part of the process, contract city representatives and OCSD discuss ongoing needs relative to public safety and cost-sharing/saving measures that provide sufficient funding for the desired level of services.

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This year, the estimate provided by OCSD is $19,629,237, which is -0.40% or $77,894 less than the previous year. The decrease is primarily due to the one- time purchase of body worn cameras during Fiscal Year 2022-23 and an overall percentage decrease in the Regional/Shared Staff costs. Included in the contract proposal is the purchase of one patrol vehicle, a mobile data computer, and in- car video camera. Staffing levels remain the same. OCSD management is currently in labor negotiations with various employee bargaining units. Bargaining activities are projected to conclude during the first quarter of Fiscal Year 2023-

24. This will almost certainly impact the total contract cost, which will require staff to return to the City Council during or around the first quarter of Fiscal Year 2023- 24 to consider adding compensation to the OCSD Agreement to cover the costs of negotiated wage increases and benefit costs of OCSD personnel.

Orange County Sheriff’s Department Staffing
OCSD proposes 54 non-shared positions for Lake Forest within categories of administration, patrol investigations, traffic enforcement, and community policing, including special events and crime prevention (Attachment 2). This is the same level of service provided for Fiscal Year 2022-23. Table 4 provides the proposed breakdown of positions for Fiscal Year 2023-24.

Table 4: Category & Position Title FY 2023-24
Category & Position Title Quantity
Administration
Captain, Chief of Police
Sergeant
Office Specialist
1 1
1 Patrol
Sergeant
Deputy Sheriff
4 32
Investigations
Investigator
Investigative Assistant
3 1
Traffic
Motorcycle Deputies
Commercial Enforcement
Community Services Officer/Parking
Enforcement Officer
2 1
5 Community Policing
Deputy Sheriff
Crime Prevention Specialist
2 1
TOTAL STAFF 54
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The proposed OSCD Agreement includes shared positions in various categories.

Consistent with past practices, the proposed shared positions and percentage contributions were derived from a detailed analysis completed by OCSD. The analysis uses actual expenditures in the current year to allocate anticipated shared personnel costs in the upcoming year among the various contract cities in south Orange County. The sharing of resources creates efficiency and controls costs for all participating cities and is one of the many benefits of the contract method of service delivery. The percentage contribution decreased for all Traffic and Detective positions but increased for Auto Theft positions and the Courts Investigative Assistant. Table 5 provides the Regional/Shared Staff Personnel and Percentage Contributions.

Table 5: Regional/Shared Staff Personnel and Percentage Contributions Position Quantity Percentage
Contributions
Traffic Sergeant 0.6 14.19%
Traffic Deputy Sheriff 4 14.19%
Traffic Investigative Assistant 2 14.19%
Traffic Office Specialist 1 14.19%
Auto Theft Sergeant 0.3 13.34%
Auto Theft Investigator 2 13.34%
Auto Theft Investigative Assistant 1 13.34%
Auto Theft Office Specialist 1 13.34%
DET Sergeant 1 15.51%
DET Investigator 1 15.51%
Courts Investigative Assistant 2 48.85%
Motorcycle Sergeant MDC 1 7.55%
TOTAL SHARED COSTS 16.90 -
Amendment Approval
The OCSD Agreement for Fiscal Year 2023-24 stipulates that the City Manager has the authority to administratively approve amendments that would not exceed one percent of the total contract cost. Based on the total cost of $19,629,237, this would allow the City Manager to approve amendments up to $196,292.37. Staff recommends the City Council approve the proposed OCSD Agreement.

FISCAL IMPACT:

The total cost of the proposed OCSD Agreement for Fiscal Year 2023-24 is $19,629,237, which is a decrease of $77,894 or -0.40% from the Fiscal Year 2022-23 contract. Due to ongoing labor negotiations between OCSD management and employee bargaining units, staff will likely return to the City Item: 16
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Council during or around the first quarter of Fiscal Year 2023-24 to consider adding compensation to the OCSD Agreement to cover increased wage and benefit costs of OCSD personnel. The proposed 2023-2025 Operating Budget includes sufficient funding to cover the costs of the recommended action.

ATTACHMENTS:

1. Agreement for Law Enforcement Services with Orange County Sheriff‘s Department for Fiscal Year 2023-24

2. Orange County Sheriff‘s Department Fiscal Year 2023-24 Staffing Plan

3. Lake Forest Police Services 2022 Annual Report
Initiated By: Sharlyn De la Paz, Senior Management Analyst Submitted By: Sean McGovern, Assistant to the City Manager Approved By: Debra Rose, City Manager
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ATTACHMENT 1
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ATTACHMENT 2
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DIRECT PURCHASE SERVICES & COUNTY
NO POSITIONS SALARY OVERTIME BENEFITS POST PAY SUPPLIES TRANSP. DEPT. OH DIV. OH TRAINING OH OTHER REVENUE TOTAL 1 Captain 201,059 0 182,992 0 5,993 0 9,240 21,489 4,525 3,659 0 0 428,957 1 Sergeant, Administrative 151,382 0 141,490 13,984 5,993 0 9,240 25,229 4,525 3,010 0 0 354,853 4 Sergeant, Patrol 605,528 0 565,960 55,936 23,972 0 36,960 100,916 18,100 12,040 0 0 1,419,412 3 Investigator 400,734 0 380,895 35,304 17,979 0 27,720 173,388 13,575 7,935 0 0 1,057,530 2 DS II Community Support 244,068 0 231,672 14,984 11,986 0 18,480 54,114 9,050 4,714 0 0 589,068 1 DS II Commercial Vehicle Enforcement 122,034 0 115,836 7,492 5,993 0 9,240 27,057 4,525 2,357 0 0 294,534 31 DS II Patrol 3,783,054 0 3,590,916 232,252 185,783 0 286,440 838,767 140,275 73,067 0 0 9,130,554 1 DS II Patrol Homeless Liaison Officer (HLO) 122,034 0 115,836 7,492 5,993 0 9,240 27,057 4,525 2,357 0 0 294,534 2 DS II Motorcycle 250,068 0 235,286 14,984 11,986 0 18,480 54,114 9,050 4,824 0 0 598,792 46 Subtotal Safety $5,879,961 $0 $5,560,883 $382,428 $275,678 $0 $425,040 $1,322,131 $208,150 $113,963 $0 $0 $14,168,234 5 Community Services Officer/Parking 287,040 0 203,210 0 29,965 0 46,200 126,145 0 5,225 0 0 697,785 1 Crime Prevention Specialist 59,176 0 38,377 0 5,993 0 9,240 2,059 0 1,077 0 0 115,922 1 Investigative Assistant 67,704 0 56,727 0 5,993 0 9,240 57,599 0 1,232 0 0 198,495 1 Office Specialist 54,974 0 35,527 0 5,993 0 9,240 2,059 0 1,001 0 0 108,794 8 Subtotal Professional $468,894 $0 $333,841 $0 $47,944 $0 $73,920 $187,862 $0 $8,535 $0 $0 $1,120,996 54 TOTAL STAFF $6,348,855 $0 $5,894,724 $382,428 $323,622 $0 $498,960 $1,509,993 $208,150 $122,498 $0 $0 $15,289,230

REGIONAL / SHARED STAFF

0.6 Traffic - Sergeant 14.19% 17,709 1,892 14,791 1,191 672 426 787 1,338 385 389 0 0 39,580 4 Traffic - Deputy Sheriff II 14.19% 81,137 13,404 72,734 4,253 4,478 13,363 5,245 8,918 2,568 1,848 0 0 207,948 2 Traffic - Investigative Assistant 14.19% 19,842 0 16,265 0 2,203 0 2,622 3,342 0 371 0 0 44,645 1 Traffic - Office Specialist 14.19% 8,005 56 5,087 0 1,101 0 1,311 1,671 0 151 0 0 17,382

0.3 Auto Theft - Sergeant 13.34% 8,325 889 6,953 560 275 201 370 628 181 183 0 0 18,565 2 Auto Theft - Investigator 13.34% 37,700 4,012 34,795 3,140 1,835 1,340 2,465 4,186 1,207 839 0 0 91,519 1 Auto Theft - Investigative Assistant 13.34% 9,202 376 7,679 0 901 0 1,233 1,568 0 179 0 0 21,138 1 Auto Theft - Office Specialist 13.34% 7,343 0 4,743 0 901 0 1,233 1,568 0 137 0 0 15,925 1 DET - Sergeant 15.51% 24,166 5,092 22,463 2,169 949 0 1,433 7,538 702 572 0 0 65,084 1 DET - Investigator 15.51% 21,606 5,469 20,311 1,826 949 0 1,433 7,538 702 526 0 0 60,360 2 Courts - Investigative Assistant 48.85% 71,535 3,136 58,549 0 5,975 0 9,212 2,053 0 1,359 0 0 151,819 1 Motorcycle Sergeant + MDC 7.55% 12,003 820 11,179 1,055 735 1,299 697 1,186 342 276 901 0 30,493

16.90 Subtotal $318,573 $35,146 $275,549 $14,194 $20,974 $16,629 $28,041 $41,534 $6,087 $6,830 $901 $0 $764,458

SALARIES & EMPLOYEE BENEFITS INDIRECT COSTS
FINAL
CITY OF LAKE FOREST One (1) DSII Patrol to a DSII Homeless Liaison Officer FISCAL YEAR 2023-24 One (1) Class A - Black & White Patrol Vehicle May 9, 2023
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ADDITIONAL SERVICES & COUNTY
NO COSTS/REVENUE SALARY OVERTIME BENEFITS POST PAY SUPPLIES TRANSP. DEPT. OH DIV. OH TRAINING OH OTHER REVENUE TOTAL Overtime 1,099,961 80,805 20,019 1,200,785
Estimate: Vacancy Credit (200,000) (200,000)
Special Services Overtime
Annual Leave (Pay Downs & Termination Pay) 296,792 296,792 AB109 (2011 Public Safety Realignment) (31,905) (31,905) Body Worn Cameras (BWC) and In Car Video (ICV) Costs 346,962 346,962 1 Class A - Black & White Patrol Vehicle 85,840 85,840
Contract Administration 58,746 58,746
Data Line 6,235 6,235
6 E-Citation 13,328 13,328
Enhanced Helicopter Response Services 45,071 45,071
Facility Lease 107,257 107,257
Holiday Pay: Comp & Straight Time 260,883 260,883
Integrated Law & Justice Agency of Orange County 5,859 5,859 1 Mobile Data Computers (MDC) - Acquisition 8,067 8,067 34 Mobile Data Computers (MDC) - Recurring Costs 123,606 123,606 Patrol Training Cost Allocation (FTB) 225,342 225,342
Premium Pay 229,611 229,611
Retirement Rate Discount (Expenses for Interest and Issuance) 0 Retirement Rate Discount (Gross) 0
Revenue/False Alarms (24,225) (24,225)
Revenue/Training Reimbursement 0
Services & Supplies 90,361 90,361
Transportation - Vehicle Fuel, Mileage Interest and Maint., etc. 729,901 729,901 Restitution Payments Credits (2,967) (2,967)
Subtotal $0 $1,099,961 $80,805 $0 $203,853 $774,972 $0 $0 $225,342 $20,019 $1,229,694 ($59,097) $3,575,549 FY 2023-24 FINAL CONTRACT TOTAL $6,667,428 $1,135,107 $6,251,078 $396,622 $548,449 $791,601 $527,001 $1,551,527 $439,579 $149,347 $1,230,595 ($59,097) $19,629,237 FY 2022-23 FINAL CONTRACT TOTAL $6,787,092 $1,157,750 $6,415,364 $447,722 $504,727 $606,701 $477,222 $1,546,792 $446,438 $163,762 $1,210,387 ($56,826) $19,707,131 -1.76% -1.96% -2.56% -11.41% 8.66% 30.48% 10.43% 0.31% -1.54% -8.80% 1.67% 4.00% -0.40% ($119,664) ($22,643) ($164,286) ($51,100) $43,722 $184,900 $49,779 $4,735 ($6,859) ($14,415) $20,208 ($2,271) ($77,894) Lake Forest FY 2023-24 Spreadsheets.xlsx/FINAL FY 23-24 Page 2 of 2 Item: 16
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9 ATTACHMENT 3
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9 Lake Forest Police Services
Part I Crimes
Crime 2017 2018 2019 2020 2021*
Criminal Homicide 0 2 0 1 0
Rape 19 14 7 9 7
Robbery 24 36 14 26 21
Assaults 90 108 54 57 16
Residential
Burglary 64 73 48 35 25
Commercial
Burglary 102 66 60 89 35
Larceny-Theft 504 510 503 626 372
Auto Theft 87 112 74 100 50
TOTAL 890 921 921 943 526
*Note: The statistics provided for 2021 only reflect crimes from January – May in accordance to the FBI’s Uniform Crime Reporting (UCR) Program. OCSD switched to National Incident-Based Reporting System (NIBRS) in June 2021. Department of Justice certification is pending.

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CITY COUNCIL AGENDA REPORT
MEETING DATE: 6/6/2023
DEPARTMENT: Finance
SUBJECT:

MISCELLANEOUS BUDGET ITEMS
RECOMMENDED ACTION(S):

1. Receive presentations on the Financial Management and Budgetary Policy and General Fund Reserve Risk Analysis.

2. Approve the proposed changes to the City’s Financial Management and Budgetary Policy.

3. Review and provide feedback regarding the General Fund Risk Reserve Analysis.

EXECUTIVE SUMMARY:

The Financial Management and Budgetary Policy was originally adopted in October of 2020. The City Council reviews this policy during each budget development process and considers any staff-recommended revisions with the adoption of the budget. Staff has conducted this review and suggests the following revisions detailed in Table 1 below.

Table 1: Suggested Revisions to Financial Management & Budgetary Policy Policy Section Suggested Revision(s)
2h/2l (Attachment 1) Align policy with City’s new Program Based Budgeting approach
4c Align policy with proposed revisions in the General
Fund Risk Reserve analysis
4k Define a target level of funding for the City’s pension plan in conjunction with the General Fund Risk
Reserve analysis
4l Define a target level of funding for the City’s Other Post Employment Benefit (“OPEB”) plan in
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conjunction with the General Fund Risk Reserve
analysis
9a/b Align policy with City’s Statement of Investment
Policy
Staff recommends the City Council approve all proposed changes to the Financial Management and Budgetary Policy. These changes are described in blue and yellow highlighted text in Attachment 1.

In addition, a Risk Analysis was performed in coordination with the development of the operating budget (Attachment 2). The City’s Risk Based Reserve is designed to develop standards for setting reserve levels for various significant City funds. Adequate reserve levels are a necessary component of the City’s overall financial management strategy and a key factor in external agencies’ measurement of the City’s financial strength.

The draft Risk Analysis recommends a $56.6 million Target Reserve Level and a Minimum Reserve Level of $53.77 million (5% below the Target Reserve amount). The two most significant changes to the recommended reserves are to the Expenditure Volatility and Other Fund Dependency-Annual risk categories.

These recommended reserve increases are due to the inflationary pressures increasing contract service costs and diminishing fuel tax-related revenues due to the rising popularity of electric vehicles.

Staff recommends the City Council review and provide feedback regarding the General Fund Risk Reserve Analysis. The Risk Analysis and Target Reserve Level will be presented for final adoption at the June 20, 2023, City Council meeting alongside the 2023-2025 Operating Budget.

BACKGROUND:

The Financial Management and Budgetary Policy was originally adopted in October of 2020. The City Council reviews this policy during each budget development process and considers any recommended revisions with the adoption of the budget. Table 2 summarizes the history and purpose of the Financial Management and Budgetary Policy.

Table 2: Financial Management and Budgetary Policy
Policy/Process First
Adopted
Last
Revision
Purpose
Financial
Management and
Budgetary
10/20/2020 01/03/2023 Provides the framework
and direction for financial
planning and decision
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making by the City Council
and staff.

The Risk Analysis is performed biennially in coordination with the development of the operating budget. The City’s Risk Based Reserve is designed to develop standards for setting reserve levels for various significant City funds. Adequate reserve levels are a necessary component of the City’s overall financial management strategy and a key factor in external agencies’ measurement of the City’s financial strength.

Established reserves will be based on an analysis of the risks that influence the needs for reserves as a hedge against uncertainty and loss. A risk is defined as probability and magnitude of a loss, disaster, or other undesirable event. The Risk Analysis will review the following risk factors and the City ‘s level of exposure to each risk factor impacting the City’s General Fund.

The eight required risk factors per the Policy are:

1. Revenue Source Stability

2. Vulnerability to Extreme Events

3. Expenditure Volatility

4. Leverage

5. Liquidity

6. Other Fund Dependency

7. Growth

8. Capital Projects – Infrastructure & Asset Replacement The Risk Analysis identifies the reserve level for each risk factor and the recommended Target General Fund Reserves based on all risk factors.

Pursuant to the Financial Management and Budgetary Policy, the Total Minimum Reserve shall be established 5% below the Target General Fund Reserve Level.

Also, the Target General Fund Reserves and Total Minimum Reserve must be established and updated by resolution based on each biennial analysis. Finally, spending beyond the Total Minimum Reserve requires a four-fifths vote of the City Council.

DISCUSSION:

Financial Management and Budgetary Policy
As stated in the policy, the City Council reviews this policy during each budget development process and considers any recommended revisions with the Item: 17
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adoption of the budget. Staff is recommending updates to the policy as well as correcting minor errors.

The most recent review and adoption of the Financial Management and Budgetary Policy was on January 3, 2023. Unfortunately, the incorrect attachment was provided along with the staff report that was distributed ahead of the City Council’s consideration of these changes. As a result, staff are proposing two categories of changes to the Financial Management and Budgetary Policy for the City Council’s consideration (Attachment 1).

The first category of staff-proposed changes is highlighted in yellow. These changes would modify the Financial Management and Budgetary Policy to what should have been attached to the City Council staff report ahead of January 3, 2023 meeting. These yellow-highlighted changes simply correct the clerical error made in compiling the agenda document for the January 3, 2023, City Council meeting.

The second category of staff-proposed changes highlighted in blue are newly proposed revisions as outlined in Table 2.

Table 2: Summary of Newly Suggested Revisions
Policy Section Suggested Revision(s)
2h/2l (Attachment 1) Align policy with City’s new Program Based Budgeting approach
4c Align policy with proposed revisions in the General
Fund Risk Reserve analysis
4k Define a target level of funding for the City’s pension plan in conjunction with the General Fund Risk
Reserve analysis
4l Define a target level of funding for the City’s OPEB plan in conjunction with the General Fund Risk
Reserve analysis
9a/b Align policy with City’s Statement of Investment
Policy
As required by the Financial Management and Budgetary Policy, the City maintains a Pension Employer Contribution Stabilization Trust Fund and an Other Post-Employment Benefits Trust Fund as part of its risk-based reserve approach. The City has established a trust with Public Agency Retirement Services (“PARS”) to meet this requirement. The Policy requires an update on the balance of the available resources and any recommendations for the budget Item: 17
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period. The PARS annual report is attached, which provides the required annual update (Attachment 3).
4k – Pension
The City participates in the California Public Employees Retirement System (“CalPERS”). As of June 30, 2021, the pension plan funded status for classic CalPERS employees is 106.7% funded, while the pension plan funded status for PEPRA employees is 105.7% funded. New unfunded liabilities can emerge in future years due to investment return assumptions or method changes, changes in plan provisions, and actuarial experience different than assumed. The unfunded liability fluctuates based on the gains or losses of CalPERS investments and is anticipated to return to the funded status of prior years’ high ninety percentile. Due to current assumptions, there are no unfunded liability payments in Fiscal Year 2023-24. Approximately 45% of Lake Forest employees are classic CalPERS members.
4l - OPEB
In connection with the pension retirement benefits for employees, the City is required to contribute to an Other Post Employment Benefit (“OPEB”) plan to provide postemployment health-care benefits through the California Public Employees Medical and Hospital Care Act (PEMHCA). These benefits are available to employees who meet the CalPERS eligibility requirement and also retire from the City. The retiree is entitled to participate in the City-sponsored medical plan, and the City contributes up to $143 per month toward the premium for employee-only coverage under the City sponsored medical plans.

According to the latest Financial Statements issue for the City, the current OPEB funded status is 54%. The average OPEB funded status of the 10 comparable agencies in the City’s Risk Analysis is 21% (Attachment 2). It would be prudent to set aside reserves to fund this liability related to OPEB. Staff is recommending a target of 100% funded status of the OPEB Plan and to make any ongoing annual required contributions based on the most recent actuarial valuation of the OPEB Plan.

Given the uncertainty around pension and OPEB issues, it is difficult to determine when increased employer liabilities (the financial contribution requirements of employers) will occur or how much they might be.. Accordingly, it would be prudent to set aside reserves to help make a more gradual adjustment to any potential large increase in contribution rates.

General Fund Risk Reserve Analysis
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The Risk Analysis should be performed biennially in coordination with the development of the operating budget. The City’s Risk Based Reserve is designed to develop standards for setting reserve levels as detailed in Table 4.

The City’s Risk Reserve Policy (Attachment 2) is a component of the City’s Financial Management and Budgetary Policy, which establishes financial parameters to guide the development of the budget. The desired policy outcome is that the long-term implications of financial decisions are fully understood and considered in the decision-making process. Accordingly, the General Fund Risk Reserve Analysis provides a funding plan that analyzes the risks that influence the level of reserves the City needs to protect the organization against uncertainty and loss.

Table 4: Reserve Levels Per Risk Factor
Policy
Section Risk Factor 2021 Analysis
2023
Analysis
1 Revenue Source Stability $7.8 $9.60
2a Vulnerability to Extreme Events -
Political

1.0 1.00
2b Vulnerability to Extreme Events -
Disaster

1.7 1.95
2c Vulnerability to Extreme Events –
Legal

1.0 1.00
3 Expenditure Volatility 1.0 4.00
4a Leverage-Debt Service 0.00 0.00
4b Leverage- Pension Unfunded
Liabilities

3.00 3.00
4c Leverage – Other Unfunded
Liabilities

0.00 1.25
5 Liquidity 8.00 8.00
6a Other Fund Dependency – Short
Term

1.00 1.00
6b Other Fund Dependency – Annual 0.00 4.30
7 Growth 1.00 2.00
8 Capital Projects -Infrastructure &
Replacement

26.80 27.50
Total Reserve Per Risk Factor $52.30 $64.60

Optional Factors Not Used in
Calculation

5 Liquidity 0.00 (8.00)
Target Reserve Level $52.30 $56.60
Minimum Reserve Level $49.70 $53.77
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(5% below)
The draft Risk Analysis recommends a $56.6 million Target Reserve Level and a Minimum Reserve Level of $53.77 million (5% below the Target Reserve amount). Changes between the prior 2021 Risk Analysis and the 2023 Risk Analysis are detailed below.

Revenue Source Stability: Proposed increased reserve level due to the growing revenue base.

Vulnerability to Extreme Events – Disaster: Proposed increased reserve level due to increased exposure to criminal cyber activity.

Expenditure Volatility: Proposed increased reserve level due to a trend of contract increases beyond typical CPI-based levels to maintain current services.

This represents one of the biggest increases in reserves proposed as inflationary pressure is impacting contract service costs.

Leverage- Pension Unfunded Liabilities: Proposed increased reserve level to make a more gradual adjustment to any potential large increase in contribution rates.

Leverage – Other Unfunded Liabilities: Proposed increased reserve level to make a more gradual adjustment to any potential large increase in contribution rates.

Other Fund Dependency – Annual: Proposed increased reserve levels due to the annual subsidy needed to maintain street maintenance service levels while gas tax revenues are diminishing. A significant reserve increase is recommended for this risk factor category, as the shift to electric vehicles is having an impact on taxes related to fuel consumption.

Growth: Proposed increased reserve levels to maintain Orange County Sheriff's Department contract for a total of two years.

Capital Projects -Infrastructure & Replacement: Proposed increased reserve levels for the funding of future asset management plan replacement needs.

Optional Factor not used in determining Target Reserve - Liquidity: Liquidity has not been used in calculating the target reserve level. For liquidity, the resources needed overlap with the other risk factors. As long as there is at least $8.0 million in reserves as a result of all the other factors combined, this same $8.0 million could be used to satisfy cash flow needs.

This proposed risk reserve growth helps to ensure funds are available for capital projects, asset replacement, and emerging issues that may result in significant Item: 17
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future expenditures. It also represents a more dynamic, transparent, and effective budgeting tool to help the City Council and staff determine the appropriate level of funding.

Staff recommends the City Council approve all proposed changes to the Financial Management and Budgetary Policy. Staff also recommends the City Council review and provide feedback regarding the Risk Analysis. The Risk Analysis and Target Reserve Level will be presented for final adoption at the June 20, 2023, City Council meeting alongside the 2023-2025 Operating Budget.

FISCAL IMPACT:

There is no fiscal impact associated with the recommended action.

ATTACHMENTS:

1. Financial Management Budgetary Policy

2. Risk Reserve Analysis

3. PARS Annual Report
Initiated By: Amy Lewis, Assistant Director of Finance
Submitted By: Kevin Shirah, Director of Finance/City Treasurer Approved By: Debra Rose, City Manager
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ATTACHMENT 2
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Lake Forest City CouncilJune 6, 2023

Lake Forest City Council
June 6, 2023